IF YOU INVESTED $1,000 IN NETFLIX IN 2007,
YOU'D HAVE NOW $110,000

All eyes are on video-streaming giant Netflix, which faces new competition from Disney’s highly anticipated streaming platform, Disney+, as it reported its first-quarter earnings Tuesday.

Its stock fell more than 1% in after-hours trading, after closing with a share price around $360.

Still, investing in early 2007, when Netflix first began streaming, would have proved to be a good bet. A $1,000 investment made on Jan. 15, 2007, would be worth more than $110,000 as of midday April 16, 2019, according to CNBC calculations, for a total return of about 10,000%. Over the same period, the S&P 500 was up just over 100%.

While the company’s stock took a slight dip after hours Tuesday, following its earnings release, it reported quarterly revenue that beat estimates and shares are up more than 34 percent as of Tuesday’s close.

Many investors relayed optimistic messages early this week. In a note, analysts at banking firm KeyBanc seemed skeptical that new streaming competition could pose a significant threat.

NFLX_chart (4).1555438177659

“While other services may carve out valuable add-on positions, we do not expect the launch of new services from Apple, Disney, AT&T, or others to meaningfully impact Netflix,” they said. “We continue to view Netflix’s strategic positioning very favorably.”

Investment banking company Deutsche Bank raised its rating on Netflix shares from “hold” to “buy” early Tuesday, saying the service is becoming more like a “platform” every day.

“Platform status brings network effects not available to peers and competitors,” analyst Bryan Kraft wrote in a note. “Specifically, this is making Netflix even more of a go-to destination when consumers want to watch something, and it means having Netflix is becoming more of a cultural necessity for people around the world. It also makes Netflix a magnet for talent.”

That means “consumers stay captive within the Netflix walled garden for significant amounts of time,” Kraft added. “Aside from pay TV, which is losing audience share, there are no other competing platforms that approach Netflix’s reach.”

There are no other competing platforms that approach Netflix’s reach.
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Bryan Kraft
ANALYST

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