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Energy drink manufacturer specializing in fitness Celsius Holdings (CELH 2.18%) It has created a significant number of millionaires in the past four years. Since the company rolled out its flagship beverage brand nationwide in March 2000, its stock price has increased 3,700%.
However, the number of Celsius billionaires is probably quite small. The stock’s volume increases relatively slowly, and the time it takes for a billionaire to become a billionaire is as short as four years. Additionally, Celsius isn’t among the 100 most commonly held stocks. robinhood market Today’s brokerage firm cannot find any evidence that it ranks on any useful index of investor interest. Finally, Celsius Holdings is not yet an industry giant. There are 650 companies with market capitalizations exceeding the energy drink giant’s $13.8 billion.
These are the early stages of Celsius’ long-term growth game, and the company could potentially make more people rich over time. But so far, its ability to create millionaires is no match for the world’s money-making power. Netflix (NFLX -0.01%).
History of Netflix billionaires
The historic wealth-creating power of this media streaming pioneer is undisputed.
- This stock is on Robinhood’s list of most popular stocks, currently ranked #15, and appears in every spot check I’ve done over the past four years of data.
- Netflix has a market capitalization of $209 billion and is currently the 42nd largest stock on American exchanges.
- You’ll see a nice stock chart in your rearview mirror. Netflix is up 3,300% over the past 11 years, nearly matching Celsius’ 3,700% rise, but it was also up 727% in the 10 years before that. Thanks to the power of compound interest, the all-time price increase is 39,800%.
- Finally, Netflix’s trading volume spiked early and often, with several significant volume spikes at troughs before subsequent price spikes. Many investors took advantage of the low prices of this long-term winner product during times of hardship, such as the Qwikster debacle and Blockbuster’s DVD mail-in service.
It’s no exaggeration to say that Netflix has created many millionaires over the years. This is a strong growth story with decades of staying power. Strong business growth and continued success over many years equates to innovative business results and profitable stock returns.
Why Netflix’s breakup strategy is a smart bet for the future — again
Netflix investors have enjoyed an average annual return of 31.9% over 20 years, which has slowed slightly over the past decade to a still impressive 25.8%. Suffice it to say, these impressive gains include a horrifying crash in 2022, when investors lost faith in Netflix’s growth story amid an inflation crisis and slowing subscriber growth. At the bottom of that dark trough, Netflix stock was 76% below its all-time high in November 2021.
The stock is still recovering from its steep decline, currently trading 31% below its 2021 peak.
And that’s my view as a long-term buying opportunity. As we all know, this brutal price drop was based, at least in part, on a huge misunderstanding. Netflix’s strategic shift aims to do exactly what bearish investors have been demanding for the past two decades: grow profits rather than acquire subscribers at all costs.
While this decision may slow the pace of new subscriptions, it is consistent with our vision of lasting profitability and market relevance. Impressively, Netflix’s current valuation, at just 38 times free cash flow, paints a picture of affordability rarely seen before. For investors, this not only indicates that this gem may be undervalued, but also reflects Netflix’s adaptability and foresight in an industry known for its relentless pace and relentless competition. There is.
Remember, this company dominated the video rental market with its self-invented DVD-by-mail service, only to abandon that proven success and refocus on the even bigger digital streaming opportunity . When that drastic change took place in the summer of 2011, many Netflix investors retreated. But it was clearly the right decision, and those who bought Netflix stock in Qwikster’s valley have reaped profits ever since. Doubling down on Netflix that fall was easily the best investment I ever made, and the current selloff should provide another great buying opportunity over the long term.
So, while I wish Celsius and its shareholders the best of luck, I think the company’s share price rally is only just beginning and could help the company fend off challenge from larger, more established energy drink brands in the long run. I don’t know if it is. Netflix, on the other hand, has proven its mettle time and time again, and I think it’s a great investment at this point.
While Netflix’s strategic shift has resulted in some short-term volatility, the company is poised for long-term success. Feel free to invest accordingly.
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