The Strategist

Apple vs Netflix: What profit would make $ 1 th invested 10 years ago?

09/15/2019 - 10:37

Apple and Netflix are often mentioned in the lists of large technology companies whose early investors managed to significantly increase their capital. Which company would bring you a bigger profit if you invested 10 years ago?
Based on CNBC estimates, the $ 1,000 invested in Netflix in 2009 by September 12, 2019 would have turned into almost $ 47,400, and total revenue would have been about 4,640%. A similar amount invested in Apple would now grow to $ 10,400, and the total return would be about 940%. For comparison, the same investment in the S&P 500 would grow by almost 255% over the same period.

So, the difference between investing in Netflix and Apple is more than $ 37 thousand. Although stock prices of companies have been stable for many years, at some points they could be overestimated or, conversely, underestimated. In addition, past income does not guarantee good future results.

Apple announced launch of its new streaming service, Apple TV +, which will become available on November 1 in more than 100 countries and will cost $ 4.99 per month. Almost immediately, there were rumors about whether Apple TV + would pose a threat to other similar services such as HBO, Disney and Netflix.

Although Apple’s announcement resulted in a 2% drop in Netflix shares, it’s too early to judge whether Apple will be able to defeat Netflix, given the company is quite a latecomer in the streaming services industry.

Nevertheless, Apple partially relies on the popularity of its devices to create a large base of TV + users. Recall that, by purchasing some Apple devices, users receive an annual subscription to Apple TV + for free.

Despite a new wave of competition, Netflix has demonstrated the high performance of its applications and recently announced a number of original series and films, which are scheduled for release at the end of 2019.

In the future, the real problem will be Netflix’s ability to retain subscribers, which is directly related to dynamics of the company's share price. Since the earnings report’s publication in the second quarter, when the company reported loss of more than 100 thousand subscribers in the United States, its papers have fallen by almost 20%.

So, although over the past 10 years, the yield on Netflix stocks turned out to be higher than that of Apple, the papers of the well-known streaming service should be restored in order for Netflix to maintain its leadership.