Published on 22.03.2024

Netflix Stock

View Netflix's share price below and learn more about this stock.

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Netflix's IPO

Netflix (NFLX) went public on the American Nasdaq stock exchange in 2003 at an introductory price of $15 per share, raising almost $95 million. The IPO took place in the aftermath of the bursting of the dot-com bubble. Sentiment around internet companies was negative, and the stock halved in price in the months after the IPO.

The stock also trades on Xetra and Tradegate. However, there is higher trading volume on the Nasdaq.

Company strategy and future

Netflix operates in a rapidly growing and evolving market. Competition within the streaming market is intensifying. To name a few, Disney launched Disney+, and AT&T introduced HBO Max, a streaming variant of HBO. Plus, Discovery Inc. also introduced its streaming service Discovery+.

In the spring of 2023, HBO Max and Discovery+ merged to form a new streaming service called Max. The goal was to grow its user base to 200-300 million and compete with Netflix, among others. Other major competitors include Amazon Prime Video and Apple TV.

Before 2022, Netflix had trouble making a profit with its streaming services. To entice providers to subscribe and keep them happy, it needs a continuous flow of high-quality films, series and documentaries. This costs billions per year to maintain.

Netflix has been focused on acquiring as many new customers as possible. The company wants consumers to choose Netflix, rather than one of the competitors. Netflix calls these moments ‘winning moments of truth’. To entice consumers to choose Netflix, the company is continuously improving both the entertainment offering and technology. Netflix also started offering games to tap into another market and keep people on its platform.

Since Netflix started investing in their streaming services, it has always turned a blind eye to the trend of password sharing. That all changed in 2023, as Netflix began cracking down on the password sharing trend. The launch of paid sharing had a significant impact on their subscriber numbers as it added nearly six million paid subscribers and it greatly boosted their revenue.

History of Netflix

Netflix Inc. was founded in 1997. At that time, DVDs as successors to videotapes had just begun their rise. With DVDs, people could watch movies at home in much higher quality than before. Netflix founders Marc Randolph and Reed Hastings came up with the idea of sending DVDs by mail. They tested this first by sending a DVD to themselves. It arrived undamaged, so the entrepreneurs decided to proceed with their idea.

The following year, they launched the website, which users could use to order DVDs to be sent to their homes. In 1999, the service was expanded with a subscription model. Users could pay a fixed monthly fee to rent unlimited DVDs. There was no maximum borrowing period and there were no fines for returning them late. This set Netflix apart in customer friendliness from traditional video rental stores.

The company added features like viewing recommendations based on previous choices and user ratings. The subscription model played a significant role in Netflix's success and received a patent in 2003. By that year, the number of users had reached one million. The customer count continued to grow rapidly, reaching five million in 2006.

Launch of Netflix’s streaming service

Meanwhile, internet usage was rapidly increasing. Due in part to the rise of illegal movie and series downloads, the sale and rental of DVDs came under pressure. In the US, the DVD market peaked as early as 2005. Therefore, in 2007, Netflix decided to establish an on-demand streaming service for subscribers. This allowed people to watch movies and series online for a low monthly fee.

The number of new subscribers continued to grow steadily and reached ten million in 2009. From 2010 onwards, Netflix gradually expanded into markets outside the US. The company launched in Canada, South America and the Caribbean. Then in 2012, it crossed the Atlantic to the UK, Ireland and Scandinavia. In 2013, Netflix was introduced in the Netherlands.

The company had also started developing and producing new movies and series, such as House of Cards and Orange is the New Black. These were big hits that significantly increased the appeal of the subscription. Investing in large amounts of unique content to promote subscription growth is still at the core of Netflix's strategy.

In 2017, Netflix reached one hundred million users. By that time, it was serving customers in nearly two hundred countries. During the Covid-19 pandemic, user growth accelerated and in 2021, Netflix surpassed two hundred million users.

Dividends from Netflix

Netflix has never paid dividends and does not expect to change this in the near future.

The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks (e.g., price volatility, currency or liquidity risk). You can lose your invested funds. Consider your knowledge and experience when making investment decisions. Past performance is not a reliable indicator of future results. Markets are volatile and can fluctuate significantly due to economic, political, regulatory, or other developments.

Sources: Netflix, Nasdaq.com, Yahoo Finance, IndieWire, TechHive, CNN.com

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