Today in Market History

Today, Netflix celebrates its fifteenth year as a public company. In 2002, the DVD rental service raised $82.5 million, just 2.5% of what SNAP did in March, 2017.  But these are different companies and certainly different times. In May 2002, the NASDAQ was 67% off its highs and fewer companies were coming public, as the chart below shows.

not-as-many

Netflix has done incredible things for its customers and for its shareholders, or share traders, anyway. Over the last fifteen years, Netflix is up 14,500%, the NASDAQ 100 is up 383%, and consumer discretionary stocks are up 268%.

Netflix has had triple digit returns in five of the last fourteen years, was the best performing S&P 500 stock in 2013, and 2015,  and it’s up 27% in 2017. But oh boy, riding this stock, as is the case with every gigantic winner, has been extremely difficult. The chart below shows the growth of $10,000 in green, and the drawdowns in red.

nflx-1

Netflix was never accused of being a value stock, but it was expensive for good reason. I suppose a better way to say this is that it was cheap based on expectations, but expensive based on traditional valuation metrics. The last time Netflix traded at a P/E less than 100 was early 2015.

Netflix has grown its revenue more than 20% for 16 straight quarters. There is no way for me to quickly verify this, but I’d guess not too many companies north of $50 billion are doing this.

mflx-2

Who knows what the next fifteen years holds for this company, but as a user, and an S&P 500 index owner, I’m certainly rooting for them.

Data provided by Ycharts.

 

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