It’s very easy to find popular references to how legit Netflix subscribers share their login details with friends and family who have not paid to receive the service. That has led to Netflix management indicating that improving the state of the balance sheet will be achieved by carefully managing subscription T&Cs. There are only so many potential customers worldwide, and rival streaming services continue to enter the market or improve their offerings.
Netflix – Weekly Price Chart – 2004 – 2023 | Source: IGĭeveloping market share could be challenging. That means Netflix is not cheap compared to its peer group, but that existing investors have bought into the potential for Netflix to continue to expand market share or top-line earnings. The P/E ratio of the NASDAQ index as a whole is, in comparison, 23.24, and that of rival Disney (DIS) is 29.31. Netflix currently has a market capitalisation of $161bn and a P/E ratio of 36.34. Investors considering buying NFLX will need to factor in that Netflix is a growth stock and is, therefore, likely to experience greater price volatility than a value stock or dividend stock. The decision to invest in expanding market share has taken priority over returning funds to shareholders, and Netflix has never paid a dividend. On the one hand, the all-important US market is highly saturated, but at the same time, Netflix has successfully pursued its aim of developing a global client base.
That highlights two relevant factors when considering whether to buy Netflix stock. Over the same period, the number of US-based customers grew from 73m to 74.3m. Between October 2020 and January 2023, the number of paid subscribers grew from 195m to 231m. The service’s blend of third-party and in-house productions has proved popular with a global audience. The Netflix offering is extensive and diverse, with the firm establishing a solid track record of creating and acquiring popular original content. Its approach has been to develop a service with a broad appeal. Founded in 1997, it has been a pioneer of subscription-based streaming. Netflix, Inc. is an American technology and media services company.
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