When you constantly watch how the stocks go up and down, it can be a real turn off. Buying a stock allows you to own part of the company, which gives you the right to some of its earnings. Last week we watched as the Netflix stock fell 26% after their third-quarter result were not what management had originally forecasted. A drastic fall like this in a stock leads to many people selling their stock, as they are afraid that they won’t make a large profit.

Little do they know that if they do their research, the Netflix stock is actually predicted to grow tremendously in the future. Netflix, knowing that their stock is predicted to grow in the future has the ability to buyback their shares from those who are willing to sell it. This way, Netflix is able to keep the profit within the company and reduce the amount of shares in the market.

In my opinion, if I were Netflix I would be trying to buyback as many shares as I could, and if I were a shareholder I would continue holding onto my share. Although entering the stock market is a huge risk, and anything can happen, high-risk investments have a tendency to lead to high rewards.

Sources:

http://fw.to/2X45XgJ

http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/growth-investing/ignore-the-white-noise-about-netflixs-future/article21180198/