How rich you'd be now if you invested in Netflix in 2009

For long-term shareholders of Netflix, the end of December marks an extremely rewarding decade.

Shares of the video-streaming heavyweight have surged over 4100 percent since the end of 2009, making it the S&P 500's top performer over the past 10 years. Analysts mostly recommend investors keep buying the shares, even as the Los Gatos, California, company faces a surge in competition and questions about whether it can maintain its rapid user growth.

The dramatic rise of Netflix's business and share price established the company as part of the so-called FANG quartet of high-growth stocks - along with Facebook, Amazon.com and Google-owner Alphabet - that captivated investors and accounted for much of Wall Street's rally in recent years. Netflix expanded its subscriber base from 12 million at the end of 2009 to 158 million last September.

But at the start of 2010, when mailing DVDs to customers was still a large chunk of Netflix's business, the average analyst recommendation for the company was 'hold', making it one of the S&P 500 stocks least favoured by analysts at that time.

As well as being the top overall performer across the decade, Netflix was the S&P 500's strongest annual performer in 2010, 2013 and 2015, gaining 219 percent, 298 percent and 134 percent in each of those years, respectively.

The only other S&P 500 component leading the index more than once on an annual basis over the decade was chipmaker Advanced Micro Devices, which surged 80 percent last year and is on track to gain 132 percent in 2019. Up over 340 percent since the end of 2009, AMD's recent surge marks a comeback after a downturn in personal computer sales in the first half of the decade had many investors questioning whether the chipmaker would survive at all in the shadow of semiconductor giant Intel.

Under chief executive Lisa Su, who took over in 2014, AMD stopped losing money and is expected by analysts to expand its bottom line by over 40 percent in 2019, according to Refinitiv.

Following its stellar stock market performance, Netflix is now struggling with slowing subscriber growth, ballooning costs to produce content and new competition from Walt Disney and other services. With Netflix up 24 percent in 2019 and falling short of the S&P 500's 28 percent gain, analysts on average now recommend buying its shares. The stock remains down 20 percent from its record high close in July 2018.

Reuters

 

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