Get real time updates directly on you device, subscribe now.
Netflix was founded all the way back in 1997 by Reed Hastings and Marc Randolph, who had the ingenious idea to provide a convenient movie rental service for the masses. This started out as a postal service, whereby the pair physically mailed movies to one another to test their idea. It evolved to become an online platform in 1998, which wasn’t the service that we’re familiar with today but instead offered sales and rentals rather than streaming. It goes without saying that the company has taken some impressive technological steps into the future over the years and has become the largest streaming library in the market and is the most widely used worldwide, hitting 200 million subscribers in 2020.
The company hasn’t just made tremendous progress in terms of technological advancements, its stock value has an impressive history, which we will delve into in this article and tell you how this market leader is currently fairing in the stock market.
Netflix’s stock in the beginning
If you were one of the intuitive individuals who believed in Netflix (NFLX) when it first started up and decided to purchase its stock, then you’re probably laughing now. When Netflix officially launched in 2002, it was priced at $15 per share, and since it was ranked as the best-performing stock in the Standard & Poor’s 500 Index (S&P 500) between 2010 and 2019, your return on investment would have reached an astounding 34,340% over the company’s 18-year period of operation.
Netflix experiences turbulence
It hasn’t always been plain sailing for the streaming giant, however, as in 2011 the company’s shares encountered some big losses. Much of the reason for this was the company’s betrayal of its loyal customers by demanding that they pay more for their DVD subscription service. Shares of the company also depleted because of its decision to split off into two sister companies, launching ‘Qwikster’, which would focus on the DVD aspect of the business, whilst Netflix would continue to flourish as a streaming service.
This dramatic change caused share prices in the company to fall by nearly 80% since shareholders responded adversely to the loss of subscribers which was caused by this company split. As a result, Netflix back-tracked, canceling all plans to create a sister company, and attempted to reinstate the vital foundations of trust that they previously had with their loyal customers. In their third quarter of 2011, Netflix had almost 810,000 less subscribers than had been recorded in the previous quarter.
A dramatic recovery
Following its 2011 failures, Netflix did in fact follow through with their plans to separate the DVD and streaming services on their site. This meant launching a new and improved model of ‘Qwikster’, which they renamed ‘DVD.com’. This gave its customers the choice, to continue to buy DVDs, or to take a step towards the future and subscribe to their streaming platform. Unsurprisingly, the majority of their customers chose the latter.
As 2012 drew to a close, Netflix’s figures showed that they had gained nearly 10 million subscribers globally on their streaming platform, whilst their DVD site recorded a loss of 400,000 customers. Netflix’s stock prices recovered in response to these impressive streaming figures and by the winter of 2012, its stock price hit its highest levels yet, trading at nearly $400 a share.
Netflix stock’s current value
At the end of 2020, Netflix had a collective subscriber count of 200 million paid members which was a 30% increase on the previous year. This was, of course, driven by the fact that individuals were spending more time at home, due to enforced lockdowns as a result of the coronavirus pandemic. This also enabled Netflix to rack up an impressive profit in 2020 of almost $2.8 billion and its shares increased by over 9% at the start of 2021. You can speculate on the stock prices of market leaders like Netflix when stock trading on Plus500, for example, to keep up to date with the latest price fluctuations.
At the time of writing, Netflix has just released plans to incorporate video games into its subscription packages, for no additional fee. This could see the company gain additional subscribers who have an interest in gaming, perhaps causing them to choose its streaming service over its competitors, influenced by this attractive freebee. This could see the platform further increase its influence in its sector, and who knows the heights that its stock could reach in the future!
