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Netflix Stock Soars to All-Time High as Customers Top 62 Million

Netflix Stock Soars to All-Time High as Customers Top 62 Million
(Pascal Le Segretain/Getty Images)

Thursday, 16 April 2015 10:21 AM

Netflix Inc. soared to a record high after saying that its video-streaming service topped 62 million subscribers worldwide, as original shows such as “House of Cards” drew new viewers globally.

The stock jumped 13 percent to $537.46 at 9:39 a.m. in New York, giving the Los Gatos, California-based company a market value of $32.4 billion, exceeding that of CBS Corp.

U.S. subscribers jumped by 2.28 million in the first quarter, while international accounts rose 2.6 million, Netflix said Wednesday on its website. Both figures beat its Jan. 20 forecast. Sales grew 24 percent to $1.57 billion, matching analysts’ projections.

Netflix is investing heavily in original programming to keep the U.S. business growing and support Chief Executive Officer Reed Hastings’s international expansion. While new shows such as “Unbreakable Kimmy Schmidt” and “Bloodline” drove U.S. viewing, the rise of the U.S. dollar trimmed sales and contributed to losses overseas, the company said.

“Netflix remains a subscriber growth momentum story,” Paul Sweeney, a Bloomberg Intelligence analyst, said in an e- mail. “As long as domestic and international subscribers continue to grow, bulls will have a reason to buy the stock.”

Before Thursday, Netflix stock had advanced 39 percent this year, fourth-most among members of the Standard & Poor’s 500 Index.

Net Income

First-quarter net income fell to $24 million, or 38 cents a share, from $53.1 million, or 86 cents, as the strong dollar contributed to losses outside the U.S. Excluding that, profit was 77 cents, the company said. Analysts forecast profit of 63 cents, the average of 35 estimates compiled by Bloomberg.

Netflix has released a flurry of new series over the past few weeks, including the comic-book drama “Daredevil” from Walt Disney Co.’s Marvel. While Netflix doesn’t release viewer figures, the shows have been hits with subscribers.

“We think strong U.S. growth benefited from our ever- improving content, including the launch of the third season of ‘House of Cards,’” Hastings and Chief Financial Officer David Wells wrote Wednesday in a letter to shareholders.

Hastings said on Wednesday he expects to recommend the board split Netflix stock. The shares have more than quadrupled in the past three years.

Program Budget

Original programming is taking a larger slice of Netflix’s content budget. The company’s obligations, which grew 30 percent last year, now total $9.8 billion. The growth in subscribers justifies the increasing costs, according to Rich Greenfield, an analyst at BTIG Research.

“They are investing in content that consumers clearly want to watch,” Greenfield said. “They will continue to ramp original production to build the brand and lessen exposure to having to buy from others. Compared to an AMC or Discovery, Netflix has way more high-profile content.”

Netflix extended its service to Australia and New Zealand in March. It rolls out its streaming service in Japan later this year, its first market in Asia.

The company plans to offer its service worldwide by the end of 2016, though it is unclear if that will include China.

“On China, we’re just still learning about how best to approach it; we’re not sure,” Hastings said in an interview.

A report this week by UBS AG projected Netflix would reach 87 million subscribers outside the U.S. by 2020. They now stand at 20.9 million.

In total, Netflix forecasts 2.5 million new subscribers this quarter, including 600,000 in the U.S. and 1.9 million overseas.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose 6.2 percent in the first quarter. The index, which is weighted against other currencies including the euro and yen, had reached on March 13 the highest since its 2004 start date.

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Netflix Inc. soared to a record high after saying that its video-streaming service topped 62 million subscribers worldwide, as original shows such as "House of Cards" drew new viewers globally.
netflix, stock price, subscribers, television
Thursday, 16 April 2015 10:21 AM
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