Should you invest in Netflix stock? Overall, this is a smart investment.
Investors won’t necessarily make a fortune. After all, Netflix is not a startup with huge potential. However, chances are you’ll get a good return on your investment with NFLX.
That said, it’s always important to know what you’re getting into. Here are the pros and cons of this investment:
Good Reasons to Invest in Netflix Stock
Netflix has established itself as a strong and steady company. More importantly, they have shown that they can pivot and adjust with the times. After all, they went from a DVD service to streaming and then creating their own content in a very short period of time. All of those changes were well-received in the market. Therefore, there’s a good chance that they’ll retain or grow their value over time, in spite of competition and market changes.
Of course, Netflix has been around for a long time now. If you happened to get in on the ground floor and hold your Netflix stock, then you’ve already earned a lot of money. However, this makes many people ask, “is it too late to make money off of Netflix stock?” The market is unpredictable, but all signs indicate that it’s still smart to invest in Netflix even if you begin today.
First of all, they have really made progress with original programming. Their television shows and movies are popular. Plans are in the works to make some potential hits in the year or two to come. Furthermore, the company is growing rapidly in the international market, with a lot more room for expansion.
Concerns of Investing in Netflix Stock
No investment is perfect. One of the biggest concerns that people have about Netflix is their negative free cash flow. In order to create their terrific original content, they have to invest in that content. Therefore, they have – and plant to continue to have – debt. As long as the original content keeps doing as well as expected, the investment will be worth it. However, there is always the risk that it won’t keep paying off.
One cause for that risk is the amount and variety of competition in the market. Hulu and Amazon offer similar streaming content services. Furthermore, they also have original content. The competition is fierce. Moreover, large companies, such as Disney, are pulling content off of Netflix in order to create their own competitive services. Only time will tell how Netflix will adapt and whether their services and pricing model will continue to dominate the market.
These concerns don’t currently outweigh the benefits of investing in Netflix stock. At this time, it remains a safe, smart, and steady investment. However, if you do decide to invest, then you should keep a close eye on the competition over time. Moreover, you should watch how well Netflix originals due in the months to come. As long as they are well-received, your investment should be sound.
What are your favorite stock investments?
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