Netflix stock is considered one of the most promising assets in the technology securities category. Despite temporary fluctuations in quotes, the company continues to hold a leading position among competitors. To make a profitable investment in Netflix, study analysts' forecasts and take a look at the tech giant's financial results.
Netflix is an American streaming service. The company has existed since 1997. Now Netflix services are available in most countries, except those where there is a ban on the activities of American corporations. The secret of this company's popularity is its focus on content, while Apple and Amazon prioritize advertising for other activities on their streaming services.
The company debuted on the stock exchange in 2002. At IPO, Netflix's stock price was $15. Since listing on the stock exchange, the media company's securities have been split twice: by a 2-to-1 ratio in 2004 and 7-to-1 in 2015. Now the NASDAQ: Netflix asset can be used for long-term and short-term investing.
In its early days, the company sold and distributed movies on DVD. A year after its founding, Netflix's core business remained distribution.
In 2013, the company began releasing its movies, series, and TV programs. This decision was made by management against the backdrop of increased competition. The company constantly competes with such media giants as HBO and Disney. In 2013, Netflix allocated $2.4 billion for content creation, and by 2021 that amount had increased to $19 billion a year.
In March of this year, the media company announced the suspension of its services in Russia. The decline in the number of Russian users led to the deterioration of Netflix's financial results. After the release of the quarterly report for the first three months of 2022, the company's quotes plummeted by 25%.
After leaving the Russian market, the company recorded an outflow of subscribers. Thus, in the first quarter of 2022, their number was 221.6 million people. This was 0.2 million less than the figure for the same period last year. After Netflix left the Russian market, the number of subscribers on the service decreased by 0.7 million. The company's management forecasted a quarterly flow of subscribers at the level of 2.5 million. However, this figure was 0.5 million, not counting new users from Russia.
Netflix had good annual financial results in 2021. The company generated revenue of $30 billion, up 19% from 2020. Net income was $6.2 billion, exceeding last year's result by 35%. The streaming service released several successful projects in 2021, including "Squid Game," "Red Notice," and "Don't Look Up."
In the first quarter of 2022, Netflix generated $7.8 billion in revenue, up 10% from the same period last year. However, the figure was 1% lower than projected. Operating income was $1.9 billion. Investors in the first quarter of 2022 saw Netflix earnings per share of $3.5.
In the second quarter of 2022, Netflix management predicts an outflow of subscribers of 2 million. Revenue is expected to be $8.05 billion. Company management anticipates the possibility of a combined subscription, which will involve showing ads. This format will be suitable for users who are loyal to watching ads. This innovation will reduce the cost of subscriptions and increase revenue from streaming services through advertising integrations.
In March 2020, Netflix's stock price was holding steady at $374. After the pandemic began, the stock price began to rise.
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From May 2021 to May 2022, Netflix's stock price dropped from $498 to $198. In October 2021, the quote rose to nearly $700 but then fell again after that.
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