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The Netflix share price rockets! Here’s what I’m doing with my shares

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Picture of a Netflix menu screen
Image: Netflix

The Netflix (NASDAQ: NFLX) share price has shown a strong performance this week. As I write, it has risen by 6% in the past five days. As a holder of Netflix shares, this is great news for me as I bought more in the recent share price slump. This started around mid-July when it dropped by an initial 6%. While the volatility is a concern for me, over the year the price is now up by almost 10%. Read on to see why I think Netflix should keep its long-term position in my portfolio.

The ups and downs of the Netflix share price

This year, the video streaming platform’s share price has been quite volatile. In mid-January the share price rose by 16%, only to drop by 10% a few days later. In mid-April, it happened again with the share price dropping by 7.4% in a single day. Now the price is starting to rise sharply again, so if it’s to repeat what happened previously this year, then that would mean it should correct itself again in the coming days. This has made some investors argue the case that the share price is providing no real evidence for the direction it will go in.

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However, if I was a day trader then this would have me spooked. But Netflix, over the years, has seen good growth and as a long-term investor, I’m happy with its progress.

Competition grows

Netflix is still one of the biggest streaming services out there even though other streaming platforms are beginning to make serious moves on its market share. This is true of Walt Disney in particular with Disney+ growing every year. The company has reported a total of 116 million Disney+ subscribers worldwide. Amazon Prime is also growing fast and catching up to Netflix. In its FY20 report, the company stated that the number of Amazon Prime subscribers has now reached 200 million worldwide.

Netflix continues to grow 

While its competitors gather momentum, this hasn’t stopped Netflix subscribers from growing as well. In its June quarterly report, Netflix detailed an increase to 207.64 million paid subscribers as well as a 19% year-on-year jump in sales and a 138% rise in earnings per share at $2.97. 

Netflix is a company that has historically proved it can continue growing with a 1,420% return in the last decade. I also believe that there is still room for this company to grow further. Out of the $7.3bn of revenue generated, 55% of it came from outside the US and Canada. The streaming site is also making moves into Asian markets with the production of more than 200 original titles with 70 live action and Korean animé titles. 

Why I’m holding my Netflix shares

While the Netflix share price is unpredictable in terms of its sharp rises and falls, the streaming platform has continued to grow over the long term. I’m confident that the share price will continue to grow with potential expansions into new markets across the world. 

Although I plan to hold and build my position in the future, I’m not buying more shares right now. Based on the previous trends in the share price this year, I think I could see a drop moving into September. 

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Town owns shares of Netflix. The Motley Fool UK owns shares of and has recommended Amazon, Netflix, and Walt Disney. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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