Netflix Stocks At A Glance
When Netflix first launched its streaming service in 2007, many executives in the industry (including Blockbuster CEO) did not see it as a threat. The rest is history.
And those who thought of taking a chance to invest in Netflix at the time saw life-changing gains as the stock surged by more than 4600% in the last 15 years.
So, from benefiting from its streaming service, if you’re further looking to benefit by knowing how to buy Netflix share in India, then read on.
The reversal of fortune of Netflix as an investment has been astonishing. While it was once a high-flier, Netflix’s stock today has a little higher price-to-earnings (P/E) ratio than the broader market, at slightly more than 16. In comparison, the average P/E ratio of S&P 500 companies is around 19.6. Netflix continues to project mid- to high-single-digit revenue growth and a 19% to 20% operating margin for the full year. This operating margin is identical to what it was in 2021, illustrating how Netflix minimises any revenue loss caused by a drop in subscription base.
Netflix clearly is in excellent condition to offer consistent growth. Despite certain short-term obstacles, Netflix stock owners may still keep a bullish view due to the company’s discounted condition. So let’s understand why you should invest in Netflix and, more importantly, how to buy Netflix share in India.
How did Netflix get to the top of the online content delivery market?
To understand why you should invest in Netflix, it is crucial to understand how this video streaming company landed at the top of the content delivery market. When you think of web searches, you think of Google. When you think of social media, you probably think of Instagram and Facebook (Meta). And when you think of binge-watching TV shows and movies, you probably think of Netflix. Binge-watching has become associated with Netflixing.
Like many other successful businesses, Netflix began with a single question: how might they disrupt the DVD rental industry?
1. Disruptive Technology: From DVDs to Smartphones
Over the years, Netflix has steadily increased its audience base. Netflix first simply sent DVDs and, as time progressed, ultimately eliminated late fees, which greatly benefited Blockbuster’s crush (Netflix’s competitor).
They evolved from mailing content to streaming high-quality movies and TV shows over time. Netflix has already begun developing its original content to sustain its growth potential. This one-of-a-kind content is well-liked by the general public and has been popular across the board.
2. Bottomless content to stream:
Beyond evolving the medium of streaming, what began setting Netflix apart was its flexibility and the variety of content. The most significant benefit Netflix provides to its subscribers is the ability to video content at any time on any screen. Netflix strives to provide seamless experiences with individual preferences. Distribution partners provide Netflix subscribers with a variety of movies, TV shows, and documentaries. This constantly introduces new alternatives, enticing millions of clients globally.
3. Unique and original content:
In 2012, Netflix began creating original content. Its first one was Lilyhammer, followed by House of Cards in 2013. Since then, it has created over 1,900 originals, many of which have become well-known and have garnered several awards, such as Squid Game and The Crown. According to a Morgan & Stanley research, 39 % of Americans believe Netflix has the finest original content of any streaming service in 2021. As per 12% of the respondents, Amazon Prime Video has the best original material, with Disney Plus, Hulu, and HBO Max closely behind, each of which earned 6 per cent to 7 per cent of total responses.
4. Watch shows without interruptions:
It’s reasonable that people get irritated when advertising interrupts their favourite show. As a result, ad-blocking software is more popular than ever. Netflix understands this and offers ad-free television. These shield users from invasive and unnecessary advertisements, delivering an ad-free experience for all customers.
5. Take off the thinking cap and let Netflix do all the work:
Choosing a movie/show to watch on Saturday night is like getting takeout: there are too many options and not enough decision-making skills. In the end, we would have watched Friends for the 1000th time, but not anymore.
Netflix is aware of our everyday visits to its platform. It remembers when we watch certain shows and how many episodes we’ve seen. For them, this is how machine learning works.
Netflix effectively uses machine learning to help its computers learn. Thanks to machine learning, the software can automate millions of selections depending on user behaviour.
Consumers would waste a lot of time searching for their favourite movies and TV shows if this recommendation engine did not exist. This is why Netflix’s recommendation system is so important to the platform’s success.
Netflix is considered successful amid all its wonderful and overwhelming features because it prioritises the needs of its viewers. The constant change is bringing about advancements and making life easier for all of its users. Netflix’s success story is its marketing strategy of keeping people engaged with the service.
Why should you invest in Netflix stock in India?
Netflix has been making more than the Tudum sound, but for all the wrong reasons. During the pandemic, the popular video streaming service saw a massive bull run as a result of global shutdowns, which resulted in a significant flood of consumers looking for fresh entertainment. However, a disastrous first-quarter earnings report and the broader unfavourable atmosphere around IT businesses have caused the streaming behemoth’s shares to plunge about 70% year to date.
The company’s $7.87 billion in revenue in the first quarter of 2022 is below average projections by 1%, while earnings per share of $3.53 are handily above Wall Street forecasts by 21%. Unfortunately, the company’s financial performance was eclipsed by a decrease in customer numbers. Netflix suffered an unanticipated net loss of 200,000 customers, with another two million predicted in the 2nd period.
Yes, while the picture does look bleak, and you may wonder why you should invest in Netflix stock now, here’s why:
Historically low share price:
As a result of the loss of subscribers, Netflix is now offering its services at a more enticing price. As a result, from 2017 through 2021, the streaming behemoth has a median price-to-earnings ratio of 92. The stock is currently trading at a historically low price of 17 times earnings. Is it reasonable to expect a company’s valuation to decline when growth slows? While growth may be limited in the immediate future, the company still has a lot of room to grow in the coming years.
The average price target for netflix share price for the next 12 months is projected to be around $240, with a high estimate of $635 and a low estimate of $150. The median forecast represents a +26.94% increase over the previous price of $189.
Positioning in a competitive market:
Despite subscriber growth challenges, Netflix remains the industry’s top dog. The firm has the most viewers among streamers, accounting for 45.2% of the worldwide video streaming market and 6.4% of total TV time in the US. While the firm is going through some teething pains, it is still the world’s biggest streaming service in terms of paid customers, overall engagement, revenue, and net profit.
Potential advertising revenue:
As the constraints of subscription-based models are exacerbated by inflation and user weariness, the video streaming industry is turning to advertisements. Netflix is considering an advertising-supported tier after seeing its first membership losses in more than a decade. Platforms must seek new revenue streams to fund original content development as subscriber growth slows.
Netflix may be able to raise its average income per subscriber by utilising advertising (ARPU). The average ARPU in the United States and Canada is $14.82, according to Netflix’s Q4 2021 numbers. This is completely dependent on subscription money.
In the same time period, Roku had an ARPU of $41.03, reflecting a 43 per cent increase year over year. Roku, which allows advertising on its platform, has half as many active users as Netflix but three times the income per user. Netflix might attain half of Roku’s ARPU within the next five to 10 years, creating billions of dollars in additional income.
Although Netflix has had better times, there is no certainty that it won’t bounce back in the next years. In fact, many see it as a good opportunity to buy stock in a company the size of Netflix at a fair price. Netflix’s troubles will take some time to fix, even though the streaming behemoth must first deal with immediate challenges it may top the charts again in the future.
How to buy Netflix shares In India?
You may invest in Netflix from India by creating a brokerage account in the United States or by using technological platforms that provide this service, such as Stockal. Stockal’s mission is to make it easy for you to invest in US companies. Stockal’s goal is to make it simple, quick, and easy to invest from anywhere. A few documents that are necessary are your PAN number, a copy of your PAN card, and proof of address. Before you invest, you should consider your risk tolerance and the amount you want to invest.
An ETF is one alternative for investing in Netflix shares from India. ETFs are a collection of multiple stocks or bonds that trade as a single fund. They are similar to mutual funds. ETF units can only be bought or sold on a stock exchange during trading hours. ETFs are low-cost investments that allow you to invest in several stocks from the same index at once. Since mutual funds are currently unavailable owing to exceeding the RBI’s maximum limit, ETFs may be a viable alternative, and can be invested in through Stockal.
Stacks are pre-configured groups of stocks and exchange-traded funds (ETFs) in which you may invest with a single click. Stacks contribute to the growth of your wealth since their baskets are the result of a great deal of labour and research. They construct a single basket of stocks and ETFs by focusing on the company’s fundamentals as well as its growth potential, among other things.
The Obvious Portfolio: this stack, as the name implies, comprises the most powerful internet, media, and technological companies. Facebook, Amazon, Apple, Netflix, Google, and Microsoft are among the companies in this basket.
While direct investing in individual equities can be a successful experience, it can also expose you to stock market volatility and unanticipated price changes. Even a single tweet, much alone a full-fledged geopolitical confrontation, can now send shockwaves through the financial market. Mutual funds help minimise the dangers associated with market ups and downs. Mutual funds that invest in US firms provide exposure to Netflix, albeit to varying degrees.
We were beyond stoked when Netflix came to India with its streaming services, and we have been great customers and invested a massive chunk of our time streaming. Now, there is an opportunity to directly partake in the company by investing in Netflix from India by holding Netflix shares. This can be done in a smart, secure, smart and inexpensive way by investing in Netflix via Stockal. Stockal also offers fractional investing, where you can pay as low as $1 to own a part of a Netflix share, making it affordable and easy to invest.
Frequently asked questions:
When did Netflix launch their IPO?
Netflix trades under the symbol NASDAQ: NFLX. Their stock began trading at $15.00 on May 23, 2002. After stock splits were taken into consideration, Netflix’s first trading day finished at $16.75, or $1.20 per current share.
What is Netflix’s market value?
As of July 2022, Netflix has a market capitalization of $102.26 billion. Netflix is now the 146th most valuable firm in the world by market capitalization.