If you are a fan of watching movies and TV shows online, you’ve probably heard of Netflix stock. The subscription streaming service is run by an American company based in Los Gatos, California. It produces and distributes various television series and movies. The company has become a household name because of its innovative content, which is available to consumers in over 140 countries.
However, before investing in Netflix stock, you should do your homework. Research the company’s business model and its fundamentals to make sure you’re making a sound investment. Netflix is required to file financial statements with the SEC, which you can find on their investor relations website. Once you have these figures, you can then invest in Netflix stock.
Another useful way to compare Netflix’s share price to the market is through the “price/earnings-to-growth” ratio (PEG). The PEG ratio is calculated by dividing the current price of Netflix by the projected growth in the company’s EBITDA. A low PEG ratio means the company has a better value, while a high one means it isn’t as good a buy.
Netflix has been focused on building its global subscriber base. This helps it build a competitive moat with scale, and the company is investing heavily in producing original content in local languages. The company’s operating margin was 19.3% during the third quarter, beating its own forecast of 16%. However, it contracted sequentially and year over year, due to a stronger U.S. dollar. This trend is likely to continue as interest rates rise.
Netflix stock has a fair valuation, but its performance will depend on new initiatives and its ability to attract new subscribers. A cheaper ad-based tier could attract cost-conscious consumers who would otherwise downgrade their subscriptions. It also has the potential to bring in $1-2 billion in revenue from advertisers by 2023.
Despite the recent stock price growth, Netflix stock has exhibited volatile trends over the past several years. In March 2021, the company’s stock price climbed as high as $682, and by March 2022, it fell to $330. This volatility has prompted Netflix to warn investors in its annual report that volatility in its stock should be expected.
While subscriber growth has traditionally driven Netflix stock, the company wants to shift the narrative and focus on revenue growth. As a result, it won’t provide any more subscriber growth guidance. Instead, the company will focus on two revenue-generating initiatives. First, it will begin advertising-supported service on Nov. 3, and secondly, it will crack down on account sharing in early 2023.
Netflix stock is a great investment choice for many investors. The company offers a wide variety of entertainment content, including popular television series, documentaries, feature films, and mobile games. Members are able to access these programs on virtually any internet-connected device. It also offers DVD-by-mail membership services in the United States.