Netflix shares instead of subscription? We calculated how much money investors would have today. Vantage_DS/Shutterstock.com
The value of a Netflix share has grown by around 1,394 percent since 2014. A Netflix subscriber would have 1,338.24 euros today if he had invested the then annual subscription fee of 96 euros in shares of the streaming provider. However, it wasn’t easy for buy-and-hold investors – the stock experienced some downturns.
Almost everyone knows it and most people use it: the streaming service Netflix. The number of paying Netflix subscribers was around 260.3 million at the end of 2023. The US media company, which offers paid streaming and produces films and series, is worth around $266.98 billion.
Nevertheless, Netflix was founded when streaming was still unthinkable. The company dates back to 1997, when it was still an online video store. Films were made available by sending DVDs and later Blu-rays. Until 2010, Netflix was only available in the USA. From 2012, Netflix expanded into Europe. The streaming service has also been available in Germany since 2014.
At that time, a simple subscription cost 7.99 euros per month – around 96 euros per year. Anyone who wanted to watch their films in HD had to set aside 8.99 euros a month, around 108 euros a year, and those who wanted to use a shared apartment or family subscription had to pay 11.99 euros a month, i.e. around 144 euros a year .
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Shares instead of subscriptions
A Netflix share cost around 39 euros in 2014, but today it is just under 570 euros. This corresponds to an increase of 1,394 percent over approximately ten years.
So if you had put the money you spent on a normal Netflix subscription in a one-off investment in company shares, you would have turned 96 euros into 1338.24 euros.
An HD fan, on the other hand, would have 1,505.52 euros, while a family or shared apartment would now have 2,007.36 euros.
Netflix stock chart from its listing in 2002 to today. Finance.net
A stock in decline
Still, Netflix hasn’t been a stock that has had a flawless upward trend in the past. For example, from July to December 2018, Netflix plunged 44 percent, while the three-month period from July to September 2019 saw the stock fall nearly 30 percent. Investors also had to accept a decline in the summer of 2022. The reasons for this included slowing subscriber growth and the threat of competition from other streaming TV providers.
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ETFs for your favorite stocks – an alternative?
The example shows how difficult it can sometimes be to stick with a stock as a buy-and-hold investor. How about, for example, betting on an ETF in which Netflix is heavily weighted? One example is the iShares S&P 500 Communication Sector ETF (ISIN: IE00BDDRF478), in which Netflix currently makes up around 10 percent of the portfolio. It should be said: This is a snapshot; it is not certain that Netflix has had this weighting in the index fund’s portfolio since it was launched in 2018.
The ETF has achieved a performance of around 90 percent over five years, while Netflix shares achieved an increase of around 75 percent in the same period. This meant that ETF investors were able to record better performance than investors who bet on individual shares.
Of course, the comparison is flawed: the ETF tracks an index and therefore invests in many other stocks such as Alphabet, Meta or Walt Disney. On the one hand, this can compensate for the decline in a share, but on the other hand, it can also cause such a decline.
In addition, ETF investors also had to accept losses despite the greater diversification. For example, the ETF recorded a loss of around 33 percent in December 2022.
Which type of investment suits an investor is therefore very individual and there are always advantages and disadvantages. Nevertheless, you could – at least temporarily – invest in your favorite stock using an ETF.
Note: The calculations are presented in simplified form. There are additional fees.
Disclaimer: Stocks and other investments generally involve risk. A total loss of the capital invested cannot be ruled out. The articles, data and forecasts published are not a solicitation to buy or sell securities or rights. They also do not replace professional advice.