How to buy/invest in Netflix (NFLX) shares from India?
April 14 2022 - Team Stockal
International Investments and their myriad returns
Returns on investments increase with increasing choices. In addition to higher returns, diversification of investments minimizes investment risks. Seasoned investors hence, seek investments in foreign firms and exchanges. This international diversification bolsters profits because of the currency exchanges as well.
Realizing the significance of international investments, it is equally necessary for investors to eye for safer and more stable international options. Thus, in the following piece, the globally acclaimed streaming service Netflix is what is discussed as a prospective investment option for you.
Over-the-top media streaming services: The companies who made it to the top
The Over-the-top media service (OTT platform) is a media streaming service where content is delivered without the mediation of cables and satellite technology otherwise used for televised or radio broadcasting. Anyone from anywhere at any time can access these services provided you have an internet connection and have the bandwidth for the same. A variety of companies have been providing these streaming services to viewers across the globe. This includes Hulu, Peacock, HBO Max, Prime Video, Disney+, Netflix, Apple TV+ and several others.
Streaming services usually work on a subscription-based model; however, there are many following an ad-revenue-based model. Companies often have distinct and different models depending upon the areas their content is accessed from and the kind of audience they have. Revenue generated from these platforms worldwide is said to jump to over $210 billion by 2026, which is almost double the revenue generated in 2020, i.e. $106 billion U.S. dollars. This indicates how big this emerging market is and will be in the coming future. Possible reasons for the rapid growth of such OTT platforms can be a content explosion and the need for its dissemination in recent times. People consume content in huge quantities, and these numbers will continue to rise as the number of internet users rises.
There is one such pioneer in the streaming business, Netflix. The big tech company has delivered quality content to the remotest of places at the most affordable prices.
Netflix and the FAANG
This Big Tech American firm is also a part of the FAANG group – a group of the five big technology firms in the U.S. whose stocks are supposed to have a huge impact on overall U.S. stock markets and global markets.
Netflix: The tudum of content in the world of entertainment
Netflix Inc. is the globally renowned entertainment streaming service, present in 190 nations and delivering content to 220 million subscribers in 30 languages. The diverse range of content that Netflix delivers includes documentaries, movies, series, and feature films of different genres. It has a paid membership subscription model, and as of quarter four of the fiscal year 2021, it has around 221 million paid memberships. Despite the crowded landscape in OTT platforms, Netflix has little competition with other platforms and stays ahead of other streaming services. Members can watch anything at any point of time from anywhere without any ad breaks or commercials. The service also includes features such as subtitling and captioning, skipping intro, and screencasting, among others. Recommendations which began as a system developed from the ratings given by members in the past have allowed users to gain a personalized experience for the future.
Headquartered in Los Gatos, California, Netflix began as a DVD by mail rental service in 1997. Founders Reed Hastings and Marc Randolph launched their website Netflix.com in 1998. The one-stop destination for rental and sales of DVDs without the hassle of due dates, late fees, or monthly rental limits. It was in 2002 when Netflix made its first Initial Public Offering (IPO) under NASDAQ listed under the ticker NFLX with a per-share price being $1. It sold 5.5 million shares raising $82.5 million at $15 each.
Netflix introduced streaming only in 2007, allowing instant viewing of content and media, and in 2021, it entered the arena of mobile games. In March 2022, it acquired Next Games (NXTGMS)
Performance in numbers and figures: the race of the Stock Market
Netflix shares traded at $361.73 per share on 4th March 2022. The market capitalization is $160.5595 billion. The price per earnings per share is $32.18. The dividend is not offered to shareholders by Netflix, unlike Disney, which used to pay a dividend of $0.88 per share to its shareholders until July 2020.
The financial results from the Q4 report of the last fiscal 2021 revealed that the company made a revenue of $30 billion (full year), making a 19% growth year over year. Operating income, however, rose by 35% to $6.2 billion. Failing to achieve its own target of $8.5 million net adds, it succeeded in surpassing the Wall Street estimate by making $8.3 million paid net additions to subscriptions in Q4. The average revenue per membership rose by 7% year-on-year, defined as streaming revenue divided by the average number of paid memberships divided by the number of months in the period. From an annual GAAP operating margin of 7% in 2017, Netflix grew to 21% in 2021.
Source: Yahoo Finance
Netflix and Investment: A Squid Game or a Stranger Thing?
An analysis of the performance of Netflix stocks suggests that despite being a reputed firm and service across the globe, Netflix may have found it difficult to keep its investors happy all along. The company recorded a positive cash flow only in 2020 for the first time since 2011. This suggests that Netflix had been incurring heavy spending to finance growth and its original entertainment. Despite being extremely rich, the business model of Netflix is strictly limited to content delivery or streaming. The lack of diversification makes the investor hesitant in investing in this OTT platform. The share prices have seen a substantial dip in recent months and have been negative over the last year.
Despite all of this, Netflix has expanded its business across different countries extensively. Take the example of India. Netflix used to be an expensive proposition that could be afforded only by the affluent classes of society. Netflix, however, revised its rates just around the time when its leading competitor in the Indian market, Amazon Prime Video, hiked its prices. This suggests the strong business practices and right decisions that Netflix is capable of making and why it has 220 million subscribers and is considered one the biggest technology firms in the U.S.
In addition to the business strategies, the content available at Netflix gives it an upper edge over all its other competitors. The platform is home to a plethora of celebrated series and films which have won the Academy Awards, the Emmy Awards, the Golden Globe and several others. It is home to series such as ‘Stranger Things’, ‘Squid Games’ and ‘House of Cards’ among thousands of others. The excellent and user-friendly interface of the application and website is an added benefit that distinguishes Netflix from other platforms.
This is why investing in Netflix can fructify to sweet returns in the future, which promises higher returns from this global media streaming brand, the ‘tudum’ sound of which has become popular in millions of households across the globe.
For the Indian Investor: What, How and When?
The recent developments indicate the active interest Netflix Inc. is taking in the sphere of gaming. This is coming at a time when the New York Times acquired Wordle as a green flag for investment. This suggests that Netflix is engaging in the diversification of business, paving the way for higher yields in future. Netflix is already working with brands such as Vox to keep its content youth-oriented and information-driven. Complemented with these developments is the recent price revision made in India. For the Indian investors, this is a green signal to invest in Netflix. This is because revised and reduced rates will possibly contribute to increased membership count, taking up the revenues as well.
To be able to trade in the U.S. stock market, the Reserve Bank of India has enforced a Liberalised Remittance Scheme (LRS) that permits only $2,50,000 per financial year per person. Earlier, exchange-traded funds and mutual funds were some of the few and most rigorous ways to invest in foreign stocks. However, since March 2022, NSE IFSC has received approval from the market regulator to facilitate the international investment process. This NSE IFSC coordinated by the GIFT City presently lists only 8 of the popular U.S. stocks, including Netflix. Nevertheless, the popularity that this will gain suggests that the number may rise to 50 listings in the future. The procedure for the same is available on the official NSE website. This way, one can directly trade the shares of globally acclaimed stocks of the United States with the help of platforms such as Stockal. With over $600mn worth of transactions in the last 12 months and 220,000+ users actively trading on the platform, Stockal is your smart companion where you can even invest in a fraction of shares for as low as $1.
To sum it upThe FAANG stocks have always been the favorites for those who are new to investing, as it’s considered that these stocks will surely yield high returns. And sitting in India, if you’re looking to invest in these FAANG stocks like Netflix, then you can do so by opening an account with Stockal. With Stockal, you get the flexibility to invest in a fraction of shares, from an array of 5500+ stocks to choose from, at your convenience.
To learn more, you can visit Stockal’s website here.