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3 Stocks That Feel Like Netflix in 2002

3 Stocks That Feel Like Netflix in 2002

Netflix (NASDAQ: NFLX) was one of the greatest growth stories of the new millennium. The company went public at $15 per share in 2002, but dropped to $4.85 later that year. A $1,000 investment at the bottom would be worth nearly $850,000 today.

Therefore, investors are always looking for the “next Netflix”. Today, three of our Foolish investors will highlight three stocks that resemble the video streaming giant back in 2002 — Square (NYSE: SQ), Appian (NASDAQ: APPN), and Shopify (NYSE: SHOP).

Simplifying point-of-sale systems

Leo Sun (Square): Netflix’s success comes from its ability to disrupt old habits. It displaced video stores with rent-by-mail DVDs and replaced optical discs with streaming media. In a similarly disruptive manner, Square is changing how vendors accept payments.

Square was founded nine years ago, and its first product was the Square Reader, a credit card dongle for processing credit card transactions on smartphones. In 2013, it launched the Square Stand, which converted iPads into complete point-of-sale systems. Last year, it launched a stand-alone point-of-sale system called the Square Register for small to medium-sized businesses.

Those moves disrupted the market for traditional point-of-sale systems, which cost significantly more than Square’s solutions. Square’s system also sent information about orders and customers to the cloud — which helped vendors analyze their business trends.

Square’s expanding ecosystem includes Square Cash, a peer-to-peer payments platform similar to PayPal, the restaurant delivery service Caviar, and Square Capital, which offers financing to Square merchants. It’s also expanding into the payroll, customer relationship, and inventory management markets with add-on services.

Square’s adjusted revenue rose 43% to $984 million last year, as its GPV (gross payment volume) jumped 32% to $65.3 billion. Its adjusted EBITDA surged 209% to $139 million. For 2018, Square expects its adjusted revenue to grow 32%-35%, and for its adjusted EBITDA to surge 73%-80%. Those stunning numbers indicate that the stock — which more than tripled over the past 12 months — could still have room to run.

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