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In this detailed report, we will delve into the return on investment for Netflix Inc (NFLX)'s stock. Not only will this report cover recent returns (2024, 2023, etc.), but it will also extend its analysis up to a decade back. The rationale behind this approach is straightforward: the more data at your disposal, the better your ability to make informed future decisions.
Aside from short-term investors, not many individuals opt to sell a stock within a year. Nevertheless, analyzing annual returns provides valuable insight into a stock's periodic performance. Presented below is a table illustrating the yearly returns of Netflix Inc (NFLX) stock. Subsequently, you'll encounter a bar graph where each bar corresponds to the return rate for a specific year.
An expanding number of investors are gravitating toward ETFs and comparable products that mirror expansive indices such as the NASDAQ Composite. The principal rationale behind this trend is the risk mitigation attributed to a diversified portfolio of securities. Within this section, you'll find a comparison, including both a graph and a table, showcasing the annual returns of Netflix Inc (NFLX) juxtaposed with those of the NASDAQ Composite (IXIC).
Let's now explore and contrast the potential return of a 1000$ investment in Netflix Inc (NFLX) with the returns of the aforementioned 3 similar stocks. The table below lists these 4 stocks in descending order of their returns, from the highest to the lowest.
Let's now delve into the standout returns as well as the most challenging moments from the past several years. In this segment, we present the top 10 highest monthly returns experienced by Netflix Inc (NFLX) Stock in its history (within the range of data used in this analysis). Moreover, this section offers you the advantage of comparing the current monthly return with historical performance records. For insights into the best performing months and weeks of the current year, you can explore the NFLX's 52-week report.
Next, we will examine the lowest performances in terms of monthly returns for Netflix Inc (NFLX) stock. Here you have it: The table followed by the graph below presents the 10 lowest monthly figures for NFLX stock.
With the insights provided in the preceding report, you should now have a clearer understanding of past returns and a better perspective on potential future returns should you decide to invest in Netflix Inc (NFLX) stock.
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Netflix has seen phenomenal growth since 2009. It was responsible for producing a new category of business - subscription based online streaming. It has changed the industry landscape and pushed Blockbuster our of business. Old media companies like CBS, Fox, Viacom, Disney etc are under threat from the new way of consuming media. Netflix started as a content delivery platform, but today its responsible for content creation as well. Its original programs have won several Emmy awards. Today Netflix seems like an unstoppable force in the media landscape.
After looking at the daily returns chart for Netflix we can conclude that the returns are quite volatile and the stock can move +/- 5% on any given day. To get a sense of how extreme the returns can be we can plot a histogram.
Plotting the daily and monthly returns are useful for understanding the daily and monthly volatility of the investment. To calculate the growth of our investment or in other word, calculating the total returns from our investment, we need to calculate the cumulative returns from that investment. To calculate the cumulative returns we will use the cumprod() function.
This chart shows the cumulative returns since 2009 for Netflix. With the power of hindsight, one could have made $70 on a $1 investment since 2009. That is quite a remarkable performance. But as we know its easier said then done. During the 10 year or so period there were times when the investment lost 50% of its value during the Qwickster fiasco. Very few investors can hold onto investments through such periods.
Not surprisingly, Netflix had the best returns since 2013. Amazon and Facebook come in distant second and third. The most surprising result is Google. It has severely under performed the other stocks in the FAANG group. Maybe the market participants are worried about its spending on the moon shot projects (Google glass, X Labs, Waymo etc). Whether these projects can produce results is yet to be seen.
We already have the daily and monthly returns data for Netflix. Now we we will calculate the daily and monthly mean and standard deviations of the returns. We will use mean() and std() functions for our purpose.
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Netflix (NFLX 2.13%) has officially closed the curtain on the subscriber slump from a year ago. The leading streaming service smashed expectations in its third-quarter earnings report, adding 8.8 million subscribers. This is the fastest membership growth it's delivered since the pandemic and an unusually strong pace for the seasonally slow third quarter.
The company shared some other delightful details with investors. Its ad-based membership is up nearly 70% from the second quarter, and 30% of sign-ups in countries where it offers an ad plan are choosing the ad-supported tier.
Additionally, the company said it would hike prices again on ad-free plans in the U.S., U.K., and France on basic and premium ad-free plans, leaving the standard ad-free plan at $15.49/month in the U.S. The move seems intended, in part, to drive increased ad-based subscriptions and will grow profitability, as well. The company is also eliminating the basic tier, the lowest-priced of the ad-free options, in several more countries for new and returning members after it did the same in the U.S. and a few other major markets.
The numbers elicited cheers from Wall Street, as the stock was up 12% after hours on Wednesday. While investors were likely pleased with the price hike and the emergence of the ad business, the paid-sharing program and the contingent jump in its subscriber base is the real star.
When Netflix lost subscribers two quarters in a row last year, investors largely left the stock for dead, assuming the growth story was over. Since then, however, the company has rethought its business model and reinvigorated its growth, thanks to paid sharing and the new advertising tier, which is still building momentum.
Over the last two quarters, Netflix has added nearly 15 million new members, more than it did in the previous five quarters. A major reason for that growth is the paid-sharing program, or its crackdown on password sharing.
The company began rolling out paid sharing in May, giving users who weren't part of a paying household notice that they have two choices: sign up for their own account, keeping their preferences, or have the account they're borrowing from add them for $7.99/month.
Management has been clearly pleased with the paid-sharing program, saying that the cancel response has been lower than their expectations. On the earnings call, management also said that it expects paid sharing to drive incremental subscriber growth over the next several quarters.
Netflix's revamped pricing model and its new ad-based tier complement the paid-sharing strategy well. The ad-based tier costs just $6.99/month, and Netflix continues to argue for the compelling value it offers, noting that that price is less than a single movie ticket.
The company also wants to grow the ad tier to ensure its advertisers have a significant audience. Having a pool of value-conscious viewers to guide toward the ad tier fits perfectly with its strategic goals.
In its fourth-quarter guidance, the streamer called for similar subscriber growth in the third quarter, showing the tailwinds from paid sharing will continue. It expects revenue growth to accelerate to 10.7%.
Management said it sees no ceiling on operating margin, a reminder that profits can still move significantly higher from here, especially if the company's subscriber base keeps growing. Additionally, the stock is reasonably priced, and Netflix just announced a new $10 billion share-buyback program.
FANG stocks are famous for their impressive growth and popularity, with each member more than doubling its stock price at times over the past five years. However, despite exhibiting growth stock behavior, FANG stocks are not too volatile. This stability, along with delivering superior rates of return, has made these quite attractive to investors.
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- sm.tsa : Time Series Analysis module within the Statsmodels library
- adfuller() : to perform ADF test on data
- autolag='AIC' : Selecting the number of lags in the ADF test. 'AIC' stands for Akaike Information Criterion, a method for model selection. The AIC method helps determine the optimal number of lags in the test to obtain more reliable results.