A stock investment that appreciates so much that you no longer have to work is a dream for many people. Everyone hears about the stocks that have done so well that they’ve grown investments into enormous sums.
Netflix (NFLX -0.69%) has been such a company. But investing is about looking forward. If you made a $10,000 investment in the stock today, would it generate enough to remove all of your money concerns?
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Over the last decade, through Aug. 19, Netflix’s shares have gained 734.3%. That easily beat the S&P 500 index’s 316.2% total return.
That means your $10,000 investment in Netflix would be worth more than $83,000. If you chose the S&P 500, you would have about $42,000. That’s a nice sum, but most people can’t live off that amount of money for a long period.
If you received a similar return over the next decade, and the stock went up another 700%, you’d have more than $667,000. You could buy a lot of things, but it’s still likely not enough to provide you with enough funds for life.
Today’s Change
(-0.69%) $-0.55
Current Price
$79.59
Key Data Points
Market Cap
Day’s Range
$79.17 – $80.49
52wk Range
$65.08 – $126.71
Volume
23.8M
Avg Vol
42.6M
Gross Margin
49.53%
A risk-free Treasury security with a 10-year maturity yields about 4.2%. That works out to roughly $28,000 per year. Of course, you can potentially receive higher returns if you’re willing to bear greater risks.
However, it’s unlikely Netflix will achieve that same level of growth over the next decade. Netflix dropped out of the bidding for Warner Bros. Discovery. While understandable, that would’ve provided additional content, subscribers, and growth potential.
Netflix’s revenue has been growing at a nice clip, but it’s certainly not at a breakneck level. Second-quarter revenue increased 13% year over year to $12.6 billion. Management forecasts an 11.7% gain in the third quarter.
Meanwhile, the company faces intense competition from streaming services, including those from Amazon, Apple TV, and Disney.
Hence, for those looking for a stock that can provide life-altering gains, I’d look elsewhere.
Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Netflix, Walt Disney, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
