Netflix is on a tear, with its stock price surging to another all-time high on Wednesday after the company reported record subscriber growth.
A few years ago, before the arrival "House of Cards" and "Orange is the New Black," Netflix appeared to be on the brink of collapse. In September 2011, CEO Reed Hastings decided to split the streaming business from the DVD rental unit, which was to be named Qwikster.
Investors hated it, as did customers. Hastings backtracked on the plan, but it was too late. The stock fell so precipitously — 50 percent in two months — that in November 2011, T. Rowe Price and Technology Crossover Ventures jumped in with an emergency $400 million cash infusion.
Analysts at Canaccord Genuity kept their sell rating on the stock even after the investment, writing at the time that Netflix continues to face "numerous challenges, including subscriber losses, rising content costs and an increased competitve landscape."
In hindsight, it looks like one of the great bets of all time.
T. Rowe Price's $200 million investment was in stock — 2.86 million shares for $70 each. Since then, Netflix split its stock seven for one. Based on today's price, T. Rowe purchased shares for $10 each.
Netflix vs. S&P 500
The stock closed on Wednesday at $133.26 and climbed to $143.85 in extended trading, an increase since the 2011 investment of over 1,400 percent. The S&P 500 is up about 90 percent over the same stretch.
While Netflix still operates on minuscule profit margins, the addition of original TV shows and movies is rapidly luring new viewers just as international expansion is opening up growth opportunities.
The company said on Wednesday that it added 7.05 million subscribers during the fiscal fourth quarter, topping its own expectations of 5.2 million. Netflix said it was the largest quarterly subscriber growth in its history.
Earnings per share of 15 cents and revenue of $2.48 billion, exceeded analyst estimates for profit of 13 cents on $2.47 billion in revenue, according to Thomson Reuters consensus estimates.
"There was just the steady discipline of staying on our game of great shows, great movies and the enjoyment continues to increase," Hastings said on the conference call with analysts.
T. Rowe Price captured most of Netflix's half-decade rally, though the Baltimore-based firm has dramatically trimmed its position.
In mid-2013, T. Rowe owned 44.6 million shares, and was down to 13.1 million by early 2016, according to FactSet. At the end of last year, T. Rowe held 19.9 million shares, based on FactSet data.
TCV's 2011 investment was in the form of $200 million worth of convertible notes with an initial conversion price, on a split-adjusted basis, of $12.26 a share. Those notes have since converted to stock, and the Silicon Valley investment firm owned 5.52 million shares at the end of 2015, according to Netflix's latest annual proxy statement.
—CNBC's Christine Wang contributed to this report.
Correction: An earlier version of this story incorrectly said the stock had split twice instead of once. Stock purchase prices have been changed to reflect the revision.
