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Stock Breakdown Newsletter: Netflix - $NFLX
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Stock Breakdown Newsletter: Netflix - $NFLX

A full breakdown of the Netflix - NFLX business and stock

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The Harness Money Report
Aug 04, 2024
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The Harness Money Report
Stock Breakdown Newsletter: Netflix - $NFLX
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Disclaimer: This is for education and information purposes. Do your own research before many any investment decision. The publisher is not responsible for any losses incurred and may own the investments discussed.

Newsletter Date MAY 2024

Ticker Symbol: NFLX
Stock Price: $607.00
Website: https://ir.netflix.net/ir-overview/profile/default.aspx
Headquarters: Los Gatos, California
Incorporated: January 16, 2007
Investor Relations: https://ir.netflix.net

Overview

Netflix is a global entertainment powerhouse, with a market cap larger than Disney. They stream their content exclusively on the Netflix platform. Beginning as a DVD business they have transformed into an international content creation machine which has created multiple viral shows including Squid Game, Bridgeton and YOU watched by millions.

As of 2024 Netflix has 282,000,000 million monthly subscribers.

Number of employees = 13,000

How does the company make money?

Netflix historically made money through monthly subscribers and this is the majority of its cash flow today, but now they also receive advertising revenue along with business partnerships possibly in the form of product placement. They also sell physical products through their online store.

Netflix offers three streaming subscription plans, priced as follows:

  • Standard with ads:
    $6.99 per month.
    This plan allows you to watch in Full HD (1080p) but includes commercials.

  • Standard:
    $15.49 per month.
    This plan also streams in Full HD but without ads, and you can watch on two devices simultaneously. You can add an extra member outside your household for an additional $7.99 per month.

  • Premium:

    $22.99 per month. This is the most expensive plan, but it offers the best streaming quality (up to 4k) and allows you to watch on up to four devices at the same time. You can also add up to two extra members for $7.99 each per month.

History

Since its humble beginnings in 1997, Netflix has transformed the way we consume entertainment. What started as a DVD rental-by-mail service has evolved into a global streaming powerhouse, reshaping the entertainment industry along the way. Let's take a journey through the key milestones in Netflix's history, from its founding to its transition into the streaming giant we know today.

Founding and Early Years (1997-1999)

Founded by Reed Hastings and Marc Randolph in 1997, Netflix began as a DVD rental service, offering customers the convenience of renting movies without ever leaving their homes. Netflix was founded in order to avoid customers having to pay late fees. In 1999, Netflix introduced the subscription model, revolutionizing the way people rented movies by eliminating due dates and late fees.

Rapid Growth (2000s)

Throughout the early 2000s, Netflix experienced rapid growth, surpassing traditional brick-and-mortar rental stores like Blockbuster. Its extensive DVD library and subscription-based model appealed to consumers seeking convenience and value.

Public Offering (2002)

Netflix went public on May 29, 2002, trading on the NASDAQ stock exchange under the ticker symbol "NFLX." The IPO provided Netflix with the capital needed to fuel its expansion and invest in technology and content acquisition.

Introduction of Streaming (2007)

In 2007, Netflix made a groundbreaking move with the launch of its streaming service. Initially offering a limited selection of movies and TV shows, streaming marked a significant shift in Netflix's business model and laid the foundation for its future success.

Global Expansion (2010s)

In the mid-2010s, Netflix embarked on an ambitious global expansion, launching its streaming service in various countries around the world. This move significantly increased Netflix's subscriber base and solidified its position as a global entertainment powerhouse.

Expansion of Streaming Content (2010s)

Throughout the 2010s, Netflix invested heavily in expanding its streaming content library, striking deals with major studios and networks to license popular movies and TV shows. The platform's streaming service became increasingly popular among consumers, leading to a decline in DVD rentals.

Original Content Production (2013)

In 2013, Netflix made a bold move into original content production with the release of "House of Cards," its first original series. This marked the beginning of Netflix's strategy to produce high-quality original content to differentiate itself from competitors and attract subscribers.

This point also marked the a ramped up increase in spending on original content. Previously, Netflix relied on purchasing content from other providers, but as the service gained in popularity other media businesses began to view Netflix as a threat. This forced Netflix to create content that they could control and rely on.

Each year since they began creating content the budget for new content has increased.

Increased Subscribers and Profitability (2020 - Beyond)

Netflix has always been focused on the number of subscribers. The business began as a subscription service and that model continues to this day. In 2020, the global pandemic happened and forced billions to stay home. Netflix was in a perfect position to capture those viewers attention with content that was already made for home television.

In 2022 Netflix spent $17 Billion on new content. In 2023 they actually spent less than they anticipated at $13 Billion.

The amount Netflix spends for new content is likely to continue to increase over time as competition between studios for good talent grows.

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