Among the high-flying group of technology stocks in the group known as FAANG, perhaps none have performed as well as Netflix Inc. (NASDAQ:NFLX) in recent weeks. Netflix has seen its share price rise substantially as investors have now seemingly fully bought into the company's long-term growth plan.
The video streaming company recently reported earnings which once again came in higher than analyst estimates, leading to calm among many investors who may have been on the fence with respect to the ability of Netflix to continue to produce out-sized returns, given the impressive growth long-term investors in Netflix have benefited from.
It appears that Netflix's management team certainly has a plan forward, and while many believe that NFLX stock remains a screaming buy at this point in time, there are a couple of critical factors which should be noted for those considering potentially adding a position at these levels.
First, Netflix is expected to need to continue to heavily invest in content via raising a combination of debt and equity for some time to come.
While earnings and revenue may outpace the increase of debt over time, at this investment stage of Netflix's life cycle, concerns about rising debt levels and the cost of borrowing is likely to be a concern which will keep some investors up at night. The ability of Netflix to continue to raise prices to offset the massive investments the company is making in its content is another concern which is likely to remain as the company moves to become the global leader in streaming around the world.
Invest wisely, my friends.
Tech Insider
