Fitness-focused energy drink maker Celsius Holdings (CELH 2.15%) has created a fair number of millionaires in the last four years. The stock has gained 3,700% since taking its flagship beverage brand nationwide in March 2000.
However, the number of Celsius millionaires is probably fairly small. The stock's trading volume rose relatively slowly and four years is a short millionaire-minting period. Moreover, Celsius is not among the 100 most owned stocks on the Robinhood Markets brokerage today -- and I can't find any evidence that it ever ranked on that handy indicator of investor interest. Finally, Celsius Holdings isn't exactly an industry giant yet -- there are 650 companies with market caps larger than the energy drink maven's $13.8 billion.
These are early innings in Celsius' long-term growth game, and the company may make more people wealthy over time. But so far, its millionaire-making ability can't hold a candle to the moneymaking powers of Netflix (NFLX +0.34%).
Netflix's millionaire-making history
The media streaming pioneer's historical wealth-building muscle is undisputed:
- This stock does show up on Robinhood's list of most popular holdings, currently ranking 15th and showing up in all of the spot checks I did in data from the last four years.
- Netflix's $209 billion market cap makes it the 42nd-largest stock on American exchanges today.
- The rearview mirror shows a fantastic stock chart. Netflix nearly matched Celsius' 3,700% spurt with a 3,300% gain over the last 11 years, but also rose 727% in the 10 years before that. Thanks to the powers of compound returns, the all-time price increase works out to 39,800%.
- Finally, Netflix's trading volume spiked early and often, with several significant volume jumps in the troughs before a then-upcoming price jump. Lots of investors took advantage of low prices on this long-term winner during challenges such as the Qwikster debacle and Blockbuster's DVD-mailing service.
It's fair to say that Netflix has made lots and lots of millionaires over the years. This is a high-octane growth story with decades of staying power. Strong business growth times years and years of enduring success equals game-changing business results -- and money making stock returns.
Why Netflix's divisive strategy is a smart bet for the future -- again
Netflix investors have enjoyed an average annual return of 31.9% over two decades and change, slowing down somewhat to a still-impressive 25.8% in the last decade. Mind you, both of these impressive gains include the horrible crash of 2022 when investors lost confidence in Netflix's growth story amid the inflation crisis and slower subscriber growth. At the bottom of that dark valley, Netflix shares had fallen 76% below the all-time highs of November 2021.
The stock is still recovering from that massive drawdown, currently trading 31% below the 2021 peak.
And that's a long-lasting buying opportunity in my book. You see, the brutal price drop was at least partly based on a big misunderstanding. Netflix's strategy shift is aimed at delivering exactly what bearish investors have been asking for over the last 20 years -- growing profits instead of grabbing subscribers at any cost.
This decision might cool the pace of new subscriptions, yet it aligns with a vision of enduring profitability and market relevance. Impressively, Netflix's current valuation paints a picture of affordability rarely seen before -- a mere 38 times its free cash flow. For investors, this not only signals a potentially undervalued gem, but also reflects Netflix's adaptability and foresight in an industry known for its relentless pace and unforgiving competition.
NASDAQ: NFLX
Key Data Points
Remember, this is the company that dominated the video-rental market with a DVD-mailing service of its own invention, only to discard that proven success to refocus on the even larger digital streaming opportunity. Many Netflix investors ran for the exits when that sharp shift emerged in the summer of 2011, but it was obviously the right decision and people who bought Netflix stock in the Qwikster trough have made a mint since then. Doubling down on Netflix that fall was arguably the best investment I've ever made, and the current dip should look like another golden buying opportunity in the long run.
So I wish Celsius and its shareholders the best of luck, but its stock surge is very young and I don't know if the company can hold off challenges from larger and more established energy drink brands over time. Netflix, on the other hand, has proven its mettle time and again -- and I think it's a great investment right now.
Netflix's strategy shift brought some short-term volatility, but the company is positioned for long-term success. Feel free to invest accordingly.
