Why Netflix, Inc. Gained 14% in November

This was a quick triple play, mostly based on events out of the company's direct control. Not that there's anything wrong with that.

Anders Bylund
Anders Bylund
Dec 4, 2015 at 7:21PM
Consumer Goods

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 Netflix (NASDAQ:NFLX) rose 13.8% in November, according to data from S&P Capital IQ. After a quiet October, the digital video veteran is back to its skyrocketing ways.

NFLX Chart

NFLX data by YCharts.

So what: There was some noise at the start of November, but the big breakaway from the S&P 500 is easily pinpointed. At the midpoint of the month, Netflix got a triple helping of value-boosting help:

  • Master investor George Soros reported a brand-new Netflix position alongside a stake in Amazon.com, another newcomer to the Soros Fund Management portfolio. Investors sit up and take notice when well-known market makers turn in a new direction, and Soros is betting big on digital entertainment here.
  • Networking specialist Ericsson published its annual forecast of long-term data trends, predicting a tenfold rise in global mobile data usage between 2015 and 2021. That's up from the eightfold five-year increase it was expecting a year ago. In other words, mobile data growth is accelerating, and Netflix-style digital video plays a major part in that megatrend.
  • Finally, according to a report from the Australian government's Communications and Media Authority, some 2.5 million Aussies already subscribe to the Netflix service that launched Down Under in March. Based on this report, the Australian market was primed for a quick Netflix invasion. Lessons learned in Sydney and Auckland should help Netflix repeat this rapid launch in other new markets.

Now what: From the start of 2015 through the end of November, investors saw Netflix shares climb 151%. This stock is on a multiyear growth rampage, having risen more than 1,000% in just three years. The road has been rocky, with several 20% and 30% drops along the way, but the overall trend is undeniable: The only way seems to be up, at least in the very long run.