Netflix (NFLX) added a cool $3B to its market cap this week following Q1 earnings. The resulting pop in NFLX shares is prompting skeptics to call shenanigans. Is NFLX fully valued or is there more upside?
In 2011, following the Arab Spring, NFLX peaked at a $295 share price before a series of managerial blunders caused the stock to trough in 2012.
Netflix stock performance in the last 3 years:
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Netflix is the Madonna of web stocks, constantly reinventing itself from content to pricing to user base. It's a polarizing stock but as long as customers are happy…
Netflix is seeing strong subscriber growth, an early indicator of better margins ahead. Q1 saw $3 million in new subscribers, $2 million from domestic streaming and $1 million from international. Margin growth was a major issue last year when just about everybody and their mom wanted to create a video streaming site. It's clear now that Netflix is best positioned to take the cake in this industry. The company is forging relationships with producers to bring edited, exclusive content as opposed to lengthy serials appropriated from MTV. Quarter over quarter revenues jumped 26%.
Just because Netflix is experiencing a recovery to its brand doesn't mean it's a good stock. The market seems to have priced in future prospects before they have been delivered. Projects in the pipeline include new family plan pricing, Arrested Development, and original series Hemlock Grove. There is no guarantee that any of these upcoming catalysts will prove a revenue-generating success for Netflix. Recent performance is still short of 2011's peak; in Q1 2011, Netflix added $3 million in subscribers in the U.S. alone. Despite adding new subscribers this quarter, the company continues to hemorrhage cash reflecting the cost of original content. Free cash flow was negative $42 million in Q1.
List of companies with online streaming or video on demand services:
1. Netflix, Inc. (NFLX, Earnings, Analysts, Financials): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $9.76B, most recent closing price at $174.37.
2. Google Inc. (GOOG, Earnings, Analysts, Financials): Google is the world's most popular search engine. Market cap at $264.84B, most recent closing price at $800.11.
3. IAC/InterActiveCorp. (IACI, Earnings, Analysts, Financials): Engages in the Internet business in the United States and internationally. Market cap at $3.73B, most recent closing price at $44.25. IACI owns Vimeo and CollegeHumor.
4. Wal-Mart Stores Inc. (WMT, Earnings, Analysts, Financials): Operates retail stores in various formats worldwide. Market cap at $256.71B, most recent closing price at $77.97.
5. Amazon.com Inc. (AMZN, Earnings, Analysts, Financials): Operates as an online retailer in North America and internationally. Market cap at $119.97B, most recent closing price at $263.55.
6. BBY (BBY, Earnings, Analysts, Financials): Operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. Market cap at $8.02B, most recent closing price at $23.68.
7. Time Warner Inc. (TWX, Earnings, Analysts, Financials): Operates as a media and entertainment company in the United States and internationally. Market cap at $56.23B, most recent closing price at $60.19.
8. Dish Network Corp. (DISH, Earnings, Analysts, Financials): Provides direct broadcast satellite (DBS) subscription television services in the United States. Market cap at $18.18B, most recent closing price at $40.10.
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Dig Deeper: Access Company Snapshots, Charts, FilingsNetflix, Inc. (NFLX, Chart, Download SEC Filings) Google Inc. (GOOG, Chart, Download SEC Filings) IAC/InterActiveCorp. (IACI, Chart, Download SEC Filings) Wal-Mart Stores Inc. (WMT, Chart, Download SEC Filings) Amazon.com Inc. (AMZN, Chart, Download SEC Filings) BBY (BBY, Chart, Download SEC Filings) Time Warner Inc. (TWX, Chart, Download SEC Filings) Dish Network Corp. (DISH, Chart, Download SEC Filings)
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