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Netflix and its enormous market advantage

Most people tend to look for a safe place to put their excess money through investing in a place where that money will probably withstand inflation, which would ultimately lower its value. The first thing in deciding where to invest is to ask themselves why they wish to invest, the condition of the market, the period of investment and the risks associated with investing. Investing in stock can be reasonably high risk compared to other investments since the investor can either gain or lose everything.

One can spread money in various companies, purchase penny stocks, invest in various levels of risk firm or put all money in tried and true names. However, before investing it is critical for a person to learn as much as possible about stock markets and seek clarifications of any bothering issue. This essay presents my favorite stock idea which is based on Netflix Inc (NASDAQ:NFLX) stock.

Reed Hastings

Q1 2020 hedge fund letters, conferences and more

NFLX Stock Worth More Than Its Competitors

Over the past few years, Netflix has had an incredible history of growth in the amounts of earnings made. The company operates in the entertainment industry by offering entertainment contents to its customers. It is considered as the world’s premier streaming video service due to its greatest impact on the consumption of entertainment. Most investors nowadays view streaming video giant as a secure bet for continued growth as most people around the world prefer being entertained from home as the efforts to contain coronavirus are underway.

Even after this, Netflix is likely to retain its attractiveness even during other economic downturns because consumers are most probably able to budget for its fairly little monthly subscription regardless of the decline in incomes. Based on its performances, NFLX stock is worth more than its competitors. Currently, its stock grows continuously which gives it a greater market capitalization.

The choice for NFLX stocks as my favorite stock idea is because of various reasons. First, Netflix is creating market every day. The concept of streaming television shows and films using the internet has only been utilized for about a decade now. The company pioneered the practice and widely availed it to consumers. It partnered with other companies such as Roku and manufacturers of electronic devices to bring its services directly to DVD and Blu-ray, smart televisions, game consoles among other devices. This has taken internet viewing off computers and into areas of residence in every place thus fostering the streaming revolution.

Also, to maintain their positioning in the market, Netflix has a virtuous cycle where its customers are required to pay on a monthly basis instead of on-demand. This retains its customers because there are no other extra costs from extra streaming. Thus, investing in NFLX stock gives a guarantee for positive yields since the investor is certain of the growth of the stock bought.

Also, Netflix has proved its ability to overcome competition. Since its foundation, Netflix has tried to fight back competition challenges from popularly known companies such as Walmart and Blockbuster. Eventually, Walmart altered its DVD-by-mail services while Blockbuster filed for bankruptcy which sent their customers to Netflix. However, the companies rose again and the competition continues to date.

Many people have anticipated the eventual defeat of the company at the hands of powerful competitors such as Apple and Amazon. Despite the steep competition, Netflix has continued to raise its base of subscribers and preserved a clear lead. Currently, Netflix has more than 120 million subscribers and the number continues to rise every day. Thus investing in its NFLX stock provides the investor with the assurance of succeeding even in competition.

A Strong Growth Profile

Finally, NFLX stocks have an already strong profile of growth. The gains of membership in the company slowed for the first time in years in 2019. However, the company is still nailed on an extra 28 million subscribers in spite of the increase in prices and increased competition from Apple, Amazon and Disney. The profit margin rose from 10% in 2018 to 13% in 2019. Also, their subscription level has increased rapidly. The company has gained total control over the market in the United States with more than 60 million domestic paid subscribers. The company has also grown abroad through vigorous international campaigns which started in 2016 aimed at enhancing expansion.

Besides, since the initiation of the international expansion strategies, the NFLX stock has risen by approximately three times, which have further beefed up its resume internationally. Other reasons are that Netflix viewers really admire its content; it has more firepower for content and has a big data advantage.

In conclusion, there are various stock ideas but my favorite is NFLX stock. Netflix is a company dealing with the sale of entertainment contents. The reasons behind choosing Netflix are because it has an incredible history of operations, has numerous potential markets, is able to effectively deal with competition, and has an already strong growth profile. Overall, I feel that the company is well prepared to significantly improve its growth and market all over the world. This is why Netflix is an ideal place for every person to invest in.

Disclosure: None

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