Please ensure Javascript is enabled for purposes of website accessibility

Why Netflix, Inc. Rose 134% in 2015

By Anders Bylund - Jan 5, 2016 at 3:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors aren't worried about the digital media veteran's top or bottom lines right now. That will come later, when this rapid expansion phase is in the books.

NFLX Chart

NFLX data by YCharts.

What: Shares of Netflix (NFLX -1.85%) gained 134% in 2015, according to data from S&P Capital IQ. It was the largest jump among components the S&P 500 index. Maybe there's something to this streaming video idea, after all.

So what: Netflix didn't consistently beat earnings targets in 2015, and the company never delivered a positive revenue surprise. But none of that mattered as CEO Reed Hastings pulled in strong subscriber growth and continued to raise the bar for future periods.

For 2015, and continuing into 2016, the company's goals are all about global subscriber growth and large-scale content productions. That leaves no little room for big profits and positive cash flows in this transitional period, but should leave Netflix in a great position to start delivering those bottom-line returns in 2017 and beyond.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Now what: Today, Netflix offers streaming video services in over 60 countries and has 24 original shows on tap, many of them of award-winning quality. By the end of 2016, Hastings hopes to cover every nation on Earth in streaming goodness -- that's just short of 200 nations -- while producing at least 31 brand-new shows.

Amazon operates in a handful of overseas markets but has no ambition to match Netflix's blanket coverage. Nor is the e-tailing giant planning to keep up with Netflix's original content spending which now runs into billions of dollars per year.

So Netflix is pretty much running the global expansion content race alone, and will beat absolutely everyone in terms of content spending in 2016. This includes the traditional TV networks, in case you were wondering. It's a twofold grand experiment in digital media domination, and it should start paying real dividends in 2017.

That's right: You ain't seen nothin' yet.

Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$241.15 (-1.85%) $-4.54

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.