October 22, 2013
Netflix Shares Jump 9 Percent After Hot Quarter
Lee Rannals for redOrbit.com – Your Universe Online
Netflix saw its shares open up nine percent higher on today's market, placing the company's stock price at more than double what it was six months ago.
Evercore analyst Alan Gould wrote in a note to clients that he does not see any evidence that the rate for Netflix will slow down in the near future. He raised his price target to $350 from $150 and upgraded the stock to "equal weight" from "underweight."
Netflix shares are up 440 percent in the past 12 months, and the company reported third quarter earnings of 52 cents per share, which is above the 49 cents that analysts expected.
The company's CEO Reed Hastings said he isn't comfortable with the huge stock run-up. He told analysts on a conference call he believes Netflix's "momentum investors" are helping to drive up the price higher than normal. However, he added that this price increase was out of the company's control.
Netflix is becoming big competition for subscription-based HBO service. Although HBO now offers the "HBO GO" for customers to access content on an Apple TV or a computer, Netflix has become an even stronger competitor by bringing original-content to its site.
Netflix added a new season of "Arrested Development" to its site after reviving the show, which had been off the air since 2006. The company also added a US remake of "House of Cards" featuring Kevin Spacey and "Orange is the New Black," which was created by the creator of the popular show "Weeds."
Three of Netflix's original series netted the company a total of 14 Emmy nominations and three wins. However, despite the success of the original series, analysts are worried about the mounting cost of producing the shows. Netflix spent $100 million producing and shooting two seasons of "House of Cards," the first of which was released in February.
Netflix content chief Ted Sarandos told analysts on an earnings call the company is actively looking for documentaries to debut on Netflix and will keep an open mind about feature films. The company predicts it will be doubling its spending on original content in 2014.