Netflix (NFLX) has continuously grown at an impressive rate in recent years. Netflix’s chart shows that the stock price (NFLX) has exhibited a recurring pattern, hitting new highs, then reverting to losses and then rising again. Since 2013, the company has posted a profit over each of the previous years. Netflix’s share price is affected by two main factors: the number of subscribers and news regarding original content. For example, the company’s fourth quarter 2016 earnings report revealed an increase of more than 7 million subscribers, sending NFLX’s share price up more than 8% on the day it was released.
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After years of focusing on the domestic US market, Netflix has managed to grow its international audience with great success. After experiencing gradual international growth, by 2016 the company was available in virtually every country in the world. By distributing quality content, both original and purchased, while offering prices that can rival cable and satellite TV providers, Netflix has been able to expand rapidly into the global market. Netflix’s potential market remains huge, with the company continually adding new content to its streaming service.
It is important to note other players in the online streaming service industry, such as Hulu and Amazon Prime, which offer similar services and also produce their own content. However, Netflix remains a leader in the online streaming service industry, and since all the above platforms offer competitive prices, it is likely that many users will decide to subscribe to more than one service instead of switching between them.
What drives Netflix’s share price?
What’s interesting about Netflix’s stock is that its price is driven by both quantifiable factors, such as number of subscribers and revenue, and amorphous factors related to content creation and acquisition. The company officially publishes its revenue and number of subscribers every quarter, and has seen continued growth. Therefore, those who want to invest in NFLX should be very aware of this data and the predictions that are made in relation to it.
For example, in early 2017, the company announced that it is producing a Hollywood movie, which will be directed by Oscar-winning director Martin Scorsese and will feature a cast that includes legends like Robert De Niro and Al Pacino. This is another milestone for the company, and some believe it could even win an Oscar. Following this announcement, NFLX stock closed up more than 2%.
Another important aspect of the platform is the partnerships that Netflix establishes. In addition to producing its own content, Netflix has established partnerships with giants like Disney, including all the brands related to it, such as Marvel and Star Wars. With an ever-expanding selection of on-demand content, the Netflix name has become synonymous with binge-watching and streaming content.
Netflix was founded in 1997 as a mail-order DVD rental and sales service. After ten years in which it focused mainly on DVD rentals, the company launched the online video streaming service in 2007. As high-speed Internet is now commonplace and consumption of content through various platforms has become more common, the company has gradually increased its user base and has acquired more content by signing partnership agreements with its creators. However, the main change in the company’s revenue model came in 2013, with the introduction of its first TV series, House of Cards.
This critically acclaimed and award-winning political drama opened the door to more content creation, and in 2016, Netflix produced 126 original series and movies, surpassing all other cable and TV networks in the United States. The first international expansion of the company came in 2010, when they offered their services in Canada. Since then, its international presence has grown exponentially, and as of 2016, Netflix was available in 190 countries around the world.