Check out the incredible returns of Netflix stock, starting in the Qwikster doldrums of 2012.
Picture, if you will, the summer of 2012. Netflix (NFLX 0.63%) separated its digital streaming service from the DVD-by-mail business nine months earlier, and nobody liked the new Qwikster brand.
The company was quick to kill Qwikster, but the business model was forever split into stand-alone DVD and streaming experiences. Many investors had written off the company as a total loss, calling Reed Hastings one of the worst CEOs of 2011.
But what if you expected streaming to win in the long run, doubling down on Netflix with a $10,000 investment in June 2012? That bet on a digital-entertainment future would be worth $687,470 today:
^SPX data by YCharts.
How Netflix changed Hollywood
Times have changed, and Netflix often led the charge.
By 2024, Netflix had shipped its last DVD. The final red envelope held a Blu-ray copy of the Coen brothers’ drama True Grit starring Jeff Bridges and Hailee Steinfeld. The streaming service briefly known as Qwikster serves 270 million global accounts, generating $34.9 billion of revenue and $6.9 billion in free cash flow over the last four quarters.
Netflix has forced a fundamental change in the entertainment industry. Its original films and shows are winning Oscars and Emmys, respectively. Any content producer worth its salt is either running its own streaming service or partnering with one of the leading names in online video streaming. More often than not, the preferred streaming platform is still named Netflix.
With a newfound focus on profitable growth, the company currently is adding fewer subscribers but more revenue and bottom-line profits. Will the Netflix juggernaut keep rolling in the future?
Only time will tell, and the stock certainly won’t turn $10,000 into nearly $700,000 over the next 12 years. But Netflix remains a large-cap value stock with serious growth potential, and you should consider having a few shares in your portfolio.
The whole wealth-building story goes back to that fateful Qwikster announcement. Despite the silly name and generally poor execution of the service split, streaming was the right idea all along.