Netflix, Inc. (NASDAQ:NFLX) has seen its share price climb by 106% in the past 12 months and year-to-date it is up around 70%. While Neftlix’s incredible growth continues, it becomes more of a question of just how much more room the stock has to grow.
In its domestic market, Netflix has appeared to run out of ways to grow. Where opportunities still exist are beyond its borders and in international markets. The problem with that is there are big costs associated with expanding and especially as the company focuses more and more on creating its own content.
And although the company has been able to maintain profitability, its overall profit margin has averaged just 3% over the past five years. The big concern going forward that I’d have as investor is how well will Netflix be able to compete when producers of content decide to simply stream the content themselves rather than going through Netflix.
This could present a big obstacle for the company, pushing it from curator to creator, and into a space where it might have more challenges when competing head-on with giants like Walt Disney Co (NYSE:DIS) and other big names in the industry.
Although the stock has produced great returns for investors thus far, the share price might not have a lot of room to rise from where it is today as the stock is trading near its 52-week high. Over the longer term, I’d be surprised if Netflix can continue to grow at its current rate.
