Streaming giant Netflix Inc NFLX has been around for 25 years and over time has become the go-to streaming platform that can be found in many households around the world. The company saw its share of struggles over the years before becoming the market leader. Here’s a look back at the company’s history and how an investment in its IPO would have fared.
What Happened: Netflix ended the first quarter with 232.5 million paid subscribers around the world.
The company was founded in 1997 and launched its website NetFlix.com on April 14, 1998. Originally known as a DVD-by-mail rental service, Netflix found itself in competition with Blockbuster and other physical movie rental chains.
Blockbuster also launched its own DVD-by-mail rental service. A battle between Netflix and Blockbuster raged on for years, before Blockbuster eventually filed for bankruptcy in 2010 due to its high level of debt.
Coincidentally, Netflix once tried to sell itself to Blockbuster. Back in 2000, facing the effects of the dot-com crash, Netflix pitched a deal with Blockbuster to be acquired for $50 million, a deal that Netflix executives have said resulted in them being laughed out of the room.
Another streaming rival in Amazon Prime Video, a unit of Amazon.com AMZN, was also almost the owner of Netflix. Back in 1998, Netflix took a meeting with Amazon and was offered $15 million by Jeff Bezos, a deal they turned down thinking they had more growth to offer.
And right the Netflix co-founders were.
Netflix held its IPO on May 29, 2002, offering 5.5 million shares at a price of $15. Shares posted triple-digit returns for investors over the first several years. At the time of its IPO, Netflix had around 600,000 subscribers for its DVD-by-mail rental service.
Years later, in 2007, Netflix entered the next phase of growth by offering streaming to subscribers as part of its existing DVD rental by mail service. Eventually, the company would transition to offer streaming and mail packages separately or as bundles.
In 2012, “Lillyhammer” became the first original series to hit the Netflix streaming platform. It would be followed by hit shows like “House of Cards,” “Stranger Things,” “Squid Game” and more over the years.
Related Link: Netflix Earnings: 6 Analysts React To 'De Minimus' Subscriber Growth, Password Sharing And More
Investing $1,000 in Netflix Stock: While investors couldn’t have known that Netflix would become a streaming leader or that Blockbuster would declare bankruptcy, they could have invested in Netflix as an existing customer or someone who believed in the idea the company had and its fast growth over the years.
At a price point of $15, an investor could have purchased 66.7 shares at the time of the Netflix IPO. Stock splits in 2004 (2-for-1) and 2015 (7-for-1) would have turned the $1,000 investment into 933.8 shares.
Based on a price of $321.19 for Netflix stock at the time of writing, the $1,000 investment would be worth $299,927.22 today, representing a massive return for investors.
Netflix shares hit an all-time high of $691.69 on November 17, 2021. The $1,000 investment would have been worth a staggering $645,900.12 at that time.
While it remains to be seen if Netflix can continue to be the dominant player in the streaming market, the company is working on growth through a crackdown on password sharing and the launch of ad-supported platforms. Could Netflix post huge returns for investors over the next 25 years? Only time will tell.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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