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Thursday, December 3, 2020

Netflix Stock Staggering Vis-a-vis Amazon Stock

During the critical times of the pandemic, many companies had their stocks falling. However, for both Amazon and Netflix, their stocks have had an increase of 76 percent. Their growth in the scope of a video streaming leader has seen a growth of about 52 percent. The total return of the S&P 500 was up by 8.2 percent as dated November 4th. Undoubtedly, tech companies have had a lot of profits during covid problems because the entire world trapped inside had only one resource of complying to the digital platform. However, it was not just during the covid-19 pandemic that these companies found themselves making profits, it was due to the founding leaders of the companies that profits were made by amazon and Netflix stocks. 

The Income Of Amazon And Netflix Stocks:

Amazon has always been known for being the world’s largest bookseller, while Netflix entered the picture in 2019 on the premise of making content. Since 1997, Netflix stocks were going up based on partnerships and competition. Seeing at the onset of a digital market, Amazon also included making content to keep up with Netflix. However, what is to be taken into account is that it is only under the influence of the CEOs of the companies that the digital market has grown to this level. Now under the CEO’s vision, it was seen that Amazon does not even make as much money from e-commerce as what it makes from the content creating industry. Netflix stock growth, however, has been staggering related to that of Amazon stocks. Amazon made 1.64 billion US dollars in total shares, while in 2019 the annual sales increased to 280.5 billion. This was just a compound growth rate of 29 percent. On the other hand, Netflix stocks had about an income rising from 1.34 billion dollars to 20.1 billion US dollars in 2019. 

Amazon Or Netflix, Which Is Better?

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If one looks at it, Amazon stocks and Netflix stocks are not in an even position. While Netflix stocks are little on the low, Amazon has been a more profitable place to invest in, not just because it trades in content creation but also has a big e-commerce website. The operating income of Amazon stock has been 6.2 billion US dollars, while the operating income of Netflix stock has been 1.3 billion US dollars. What should also be taken into account is that Netflix has had to face debt and has had a negative cash flow, unlike Amazon. Amazon has had the advantage of free cash flow, they have used the money to re-invest into their own business. Netflix stock has not been so lucky in this regard and has faltered a lot. Both Amazon stock and Netflix stock has been able to reward their investors with profit in 2020. However, the P/E ratio of Amazon is forward by a score of one. While Amazon stock is at the PE ratio of 55, Netflix is at 56. This is why investors should be looking forward to investing in Amazon than in Netflix stock. 

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