Backtest: Buy and Hold NFLX (Netflix, Inc.)

This analysis evaluates a buy-and-hold strategy over the past 23 years, providing a historical perspective on NFLX's performance from 2002-05-23 to 2025-07-03.

Note: This simulation uses adjusted close prices, meaning all historical prices have been retroactively adjusted for splits and dividends. To achieve similar results in practice, you would need to reinvest all dividends automatically as they are paid.

Performance Overview

Starting with an initial capital of $10,000.00, we purchased shares of NFLX on 2002-05-23, at a price of $1.20 per share (adjusted for splits and dividends). No trading, no adjustments — just a simple buy-and-hold approach.

We held the position continuously through every market twist and turn, never selling. As of 2025-07-03, the price of NFLX had risen to $1,297.18. While we didn't sell, we can still assess the performance by calculating the current value of the investment: $10,842,097.93 — a total gain of 108,320.98%.

This translates into an annualized return of 35.31% over the entire period. The return is outstanding and far exceeds typical market returns. Such performance usually reflects an unusually favorable period or a high-risk, high-reward asset.

Drawdown and Risk

The maximum drawdown recorded during this period was 81.99%. This drawdown began after a peak price of $42.68 on 2011-07-13, and reached its lowest point on 2012-09-25 when the price fell to $7.69. The drawdown lasted for 440 days.

The drawdown was very large, indicating high sensitivity to adverse market conditions. Strategies with this profile may offer strong upside but require enduring deep declines. The maximum drawdown lasted over a year, indicating an extended period of underperformance. This duration is typical of major corrections or bear markets.

The Calmar Ratio — annualized return divided by maximum drawdown — was 0.43, reflecting the tradeoff between return and volatility.

A moderate return-to-risk profile. The strategy handled risk reasonably well while delivering decent returns.