Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE:SPY) total return over the last 12 months is 23.2%. But there is no question some big-name stocks performed better than others along the way.
Netflix’s Bumpy Ride: One company that has been a disappointing investment in the last year has been streaming video leader Netflix, Inc. (NASDAQ:NFLX).
Netflix gained a clear first-mover advantage in the over-the-top streaming space. In the past three years, the company has demonstrated for the first time that it can fend off stiff competition from top-tier competitors, led by Walt Disney Co (NYSE:DIS).
Fortunately for Netflix investors, the COVID-19 pandemic in 2020 was actually very good for Netflix’s business. While other companies were dealing with economic shutdowns, people around the world who were sheltering in place had little to do for entertainment other than stream movies and TV shows.
In 2019 Netflix reported $4.13 in EPS on $20.1 billion in revenue. In 2020, those numbers jumped to $6.08 in EPS on $25 billion in revenue.
At the beginning of 2020, Netflix shares were trading at around $326. By the beginning of March, the stock was up to $373, even after news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
Netflix bottomed at $290.25 during the pandemic-driven March sell-off. Fortunately for Netflix investors, the dip did not last long.
By April 2020, Netflix shares were back at new all-time highs above $500 and the stock got as high as $575.37 in August prior to an extended consolidation period.
From there, Netflix traded mostly sideways between around $460 and $575 for over a year before breaking out to new highs above $600 in September 2021. Netflix investors initially had high hopes for the breakout, which propelled the stock as high as $700.99 in November. Since that time, high-growth tech stocks have experienced intense selling pressure, and Netflix shares pulled back into their previous trading range.
Related Link: If You Invested $1,000 In Bank of America Stock One Year Ago, Here's How Much You'd Have Now
Netflix In 2022, Beyond: The stock eventually made it back down to $508.68 in January 2022 as investors took profits on the big run to $700. Traders may see Netflix facing an unprecedented amount of competition from other streaming services in 2022, or they may simply be rotating out of growth stocks and into value stocks in anticipation of rising interest rates.
Today, the stock is trading around $515.30.
Netflix investors who bought one year ago and held on have generated a disappointing return on their investment. In fact, $1,000 in Netflix stock bought on Jan. 19, 2021, would be worth about $1,032 today.
Looking ahead, analysts are expecting a rebound from Netflix in the next 12 months. The average price target among the 40 analysts covering the stock is $700, suggesting 37.5% upside from current levels.
