Skip to main content

Netflix 2009-2016

The above article describes what a $100 dollar investment in 2009 Netflix stock would look like in 2016 after its journey. Late into 2008, The Netflix stock was looking around $19 per share. The company needed something to increase its subscriber base and raise their stock price. In 2009 Netflix starts to shift focus from DVD delivery to online streaming. They partner with Sony and get Netflix on PS3s, smartTVs,  etc. In just a year Netflix’s stock rises to $60. From 2010-2011, Netflix finds itself on gaming consoles and apple products and is even being introduced internationally. The stock boosts to around $175 per share by end of 2010 and $247 by February of 2011. However, after Netflix increased subscription prices and lost 800,000 subscribers, their price tanked to $63 and remained very stagnant through half of 2012, hitting a low of $53.87. However, after Netflix partnered with Disney and Time Warner Cable, they once again shot their stock price up to an astounding $140 in just two days and finished the year with $355. From then on, Netflix just kept steadily climbing.

I think the story of Netflix is perfect for describing Networks dynamics with regards to equilibrium and tipping points. Firstly, Netflix starts below the lower equilibrium. The company either needs to surpass the tipping point, or it will stay in the $19 per share area and eventually die out. They did the former. Partnering with Sony was Netflix’s way to crash right through the tipping point. They could now feel the stability of the second equilibrium point as they ascending towards it. They continued to prosper until they upped their subscription price in 2011. They saw an exodus of subscribes and began to feel some bad effects of an information cascade where tons of people were selling netflix stock based on observing others do the same. Now, Netflix has found themselves back below the tipping point. They stay here until late 2012/early 2013 because they had yet to do anything to get past that tipping point. Once again, they rose above it instead of dying off. By partnering with Disney and Time Warner Cable, Netflix once again broke through the tipping point and continued to reap the stability of the higher equilibria until 2016.


Leave a Reply

Blogging Calendar

November 2017