Netflix’s return over the last decade is significantly higher than the S&P 500 index’s performance.
Phenomenal subscriber growth over the years drove revenue gains and has resulted in tremendous profits.
When investors think of the current media landscape, the business that probably comes to mind first is Netflix (NASDAQ: NFLX). The video entertainment powerhouse has been a true innovator. Today, it has a global reach, with a presence in more than 190 countries.
If you'd invested $10,000 in this streaming stock 10 years ago, here's how much you'd have today.
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A $10,000 investment in Netflix shares exactly a decade ago would be worth $83,500 today (as of June 1). This translates to a phenomenal 735% gain. Compared to the benchmark S&P 500 index, this is a significantly better return.
Massive investments in content and technology helped attract viewers who wanted a better experience than traditional cable TV. So it shouldn't be surprising for investors to learn that Netflix's impressive growth drove the stock to a big gain. At the end of last year, the company had more than 325 million subscribers. At the end of 2015, that figure totaled 71 million.
Revenue rose 565% during that same time, supporting Netflix's robust earnings profile. Operating income jumped 18.2% year over year in the first quarter (ended March 31), resulting in a stellar operating margin of 32.3%.
The streaming stock currently trades 36% off its peak. But even at a historically low price-to-earnings ratio of 27.7, the valuation still isn't in bargain territory.
Before you buy stock in Netflix, consider this:
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.