Netflix vs Google Stock: Which Is Best?

Netflix vs Google Stock: In a constantly changing marketplace, one thing is certain: winning companies are those that can lead in a digital world. Netflix and Google [NASDAQ: GOOG] are two of the top digital services providers, having proven themselves to be the very best in streaming media and web-based platforms.

Both companies designed and launched disruptive technology that transformed their respective industries. While competitors have shown interest in entering this space, none have managed to pull any significant market share away from these two powerhouses. Constant innovation and reinvestment in the business are fundamental strategies for both tech giants, so they always stay a step ahead of the pack.

Today’s technology is leaps and bounds ahead of what it was 10 years ago, and many believe that advancements will continue at a rapid rate. Companies centered in digital product offerings are generally growing, based on the nature of the industry as a whole. For investors, this presents a very basic question: do the risks of investing in growth stocks outweigh the potential benefits?

Growth investors understand that they are not going to see profits tomorrow. Maximizing gains from growth stocks requires a long-term outlook – and a certain tolerance for roller-coaster gains and losses.

Growth stocks tend to be much more volatile than their well-established peers, and a technological setback or some bad press can result in sharp drops. Of course, with careful research, it is possible to choose companies with a promising future, which can make sharp ups and downs easier to bear.

Is Netflix a Buy?

Despite its CEO’s assertions that Netflix [NASDAQ: NFLX] is a media company first, the truth is that Netflix behaves like a tech company.

Clearly, analysts and investors agree, because it is treated like a tech company in the marketplace. Either way, Netflix is today’s leader in streaming video, thanks to its advanced technology and its extensive library of content.

Since 2013, Netflix [NASDAQ: NFLX] has grown from 41.43 million subscribers to almost 148.86 million today – despite periodic price increases. This continued growth is attributed to the company’s continuous investment in top-quality programming.

In 2018, the platform invested approximately $13 billion in content, acquiring fan favorites like the 90’s sitcom Friends. Original series such as House of Cards, Orange is the New Black, and Stranger Things have been wildly successful, and original movies like Birdbox with Sandra Bullock have attracted millions of viewers.

Of course, there are challenges ahead for Netflix [NASDAQ: NFLX] and its investors. A variety of platforms are attempted to claw their way into the top spot. Longtime rival Hulu has added its own collection of high-quality original content, and Amazon is working to offer Prime customers access to current and classic movies and television.

Perhaps the greatest concern Netflix [NASDAQ: NFLX] has from a competition perspective is the upcoming release of Disney’s streaming service. An estimated 15 percent of Netflix subscribers may move to this family-centered option.

Netflix [NASDAQ: NFLX] is preparing for greater competitive threats by focusing on expansion into international markets. However, this strategy has caused the company to take on some debt – roughly $10.3 billion. Nonetheless, it remains profitable, making it a strong contender for investor dollars.

Should You Invest in Google Stock?

Google, owned by Alphabet Inc., is considered the third most valuable brand in the world – and with good reason. Its reputation as the top search engine has made an extraordinary cultural impact, and the company name is regularly used as a shorthand for “conduct an internet search” in everyday conversation.

The popularity of services like Google Maps, Gmail, and YouTube add richness and depth to the brand’s overall value proposition, and the company continues to grow and expand its product line.

Because each of the current products boast more than one billion users, Google [NASDAQ: GOOG] has access to an extraordinary amount of data on consumer behavior. This is attractive to marketers, who can customize campaigns to particular segments of the population.

Parent company Alphabet credits 85 percent of its 2018 revenue to advertising dollars. In just five years, revenues have doubled, reaching an impressive $142 billion.

Google [NASDAQ: GOOG] isn’t growing as quickly as Netflix, but it is still growing. In 2018, growth reached 23 percent, but predictions for this year are a more conservative 17 percent. Nonetheless, the company is still growing, and all signs point to continued growth in coming years.

Netflix vs Google Stock: The Bottom Line

In a matchup between Netflix and Google, the bottom line is that either is a strong choice. Individual investment decisions come down to personal priorities and financial goals. Today, Netflix is growing faster than Google, but Google [NASDAQ: GOOG] is more profitable.

Parent company Alphabet’s operating margin comes in at 23 percent, compared to just 9.74 percent for Netflix. Overall, Alphabet is expected to increase earnings by approximately 15.75 percent per year over the next five years.

Netflix’s future isn’t quite as predictable. It is unclear whether the current stock price already reflects growth potential, and the impact of competitors like Disney Plus is not yet certain. For some investors, this presents a bit too much risk to invest right now.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.