Recs

5

Netflix Shares Surged: What You Need to Know

By Matt Koppenheffer | More Articles
January 26, 2012 | Comments (4)

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of streaming-movie provider Netflix (Nasdaq: NFLX  ) were getting a standing ovation from investors today, flying up as much as 25% in intraday trading after the company delivered stellar fourth-quarter results.

So what: What a ride it's been for Netflix shareholders. First, the company was the hottest thing since volcano lava. Then it tried to shake things up and split off its DVD business and suddenly the stock was colder than an Arctic glacier. Now, as the company once again is convincing the market that the growth story is far from dead, the shares have taken off.

This latest rocket-ship impersonation came as the company reported results from the fourth quarter that wowed Wall Street and Mr. Market alike. For the quarter, Netflix managed $0.73 in per-share earnings on $876 million in revenue. Analysts were expecting earnings per share to come in at just $0.55. Perhaps more important, the company said that it finished the quarter with more than 26 million total global subscribers, which suggests that the subscriber defections that many were concerned about may have simply been a blip. Domestic subscribers were up 25% from the fourth quarter of 2010 and up 2.5% from the third quarter of last year.

Now what: If there's any one truism about Netflix right now, it's that its stock is extremely volatile. Has the company fully addressed concerns about encroaching competition from Hulu and Amazon.com? That remains to be seen. Will the international push end up paying off? That, too, needs to be proven out. But however those -- and other -- big question marks work out, what we can count on is more sharp reactions from the stock.

The stock is far more rock-and-roll than duck-and-cover right now, but anyone adding this stock to his or her portfolio better be prepared for a wild ride.

Want to keep up to date on Netflix? Add it to your watchlist.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

The Motley Fool owns shares of Amazon.com. Motley Fool newsletter services have recommended buying shares of Netflix and Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 26, 2012, at 3:06 PM, nhalden wrote:

    Here is what I don't get....

    If NF can lose 750K-1M+ subscribers and add only 600K or so...how in the hell can they say they reversed the loses?

    Also even if they made up the exact diffential...that puts them back at square one as far as subscribers...NOT GROWTH. At the peak of subscriber #'s NF stated publicly that they couldn't afford new content for the streaming service.

    Tilson taking her victory lap should watcher herself. I think the up tick is due to people who bought at 70-ish or so wanted ANY type of positive news to pounce on and move the stock up. Substance has no value here and neither does the NF report.

    This is being seen as a victory when really is't status quo...less than actually.

    The costs for international expansion are high. The costs for newer content (which isn't coming) are high. Reduced rates for DVD's are going away an no real "wanted" content is coming to streaming (HBO, STARZ is leaving, Showtime, new movies etc...)

    This is the quivalent of getting up in the morning and yet it's as if they saved the world.

  • Report this Comment On January 26, 2012, at 5:20 PM, newageinvestor wrote:

    I can't wait until Netflix gets back to the price at which I bought it so I can dump it without a loss. You can keep that volatility. I've got too many other stocks to choose from.

  • Report this Comment On January 26, 2012, at 5:44 PM, ThorsteinVeblen wrote:

    Over Christmas, I talked to an old friend who works at Sony out in LA and is in the business. He said that NF has a lot of respect out there among the studios and has some important deals in the works to acquire distribution rights. He talked me out of selling my shares and I'm glad he did.

  • Report this Comment On January 26, 2012, at 6:12 PM, centsornoncents wrote:

    I wouldn't touch NF.

    Amazon has something in the pipeline. When it finally announces it, NF will go to 0 very quickly.

Add your comment.

Compare Brokers

Fool Disclosure

DocumentId: 1766573, ~/Articles/ArticleHandler.aspx, 5/27/2012 2:41:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 12,454.83 -74.92 -0.60%
S&P 500 1,317.82 -2.86 -0.22%
NASD 2,837.53 -1.85 -0.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/25/2012 4:00 PM
NFLX $70.22 Down -0.05 -0.07%
Netflix CAPS Rating: **

Advertisement