) recently announced that it is discontinuing with the "poison
pill" provision, which had been set up late 2012 to prevent a
takeover of the company. The poison pill was slated to expire
three years after its formation.
The "poison pill" provision, which gives the shareholders
right to takeover a company, has been terminated by Netflix in
order to prevent any hostile bid from the likes of active
shareholders such as Carl Icahn. Currently, Icahn holds
approximately 4.5% of the Netflix stock.
Netflix is growing in a big way and management does not want
others to take away a significant share of the profits. The stock
has jumped a massive 275.6% over the last one-year. The strong
growth has been driven by Netflix's solid results due to
significant growth in subscriber base over the last 12
In order to maintain and extend the subscriber base, Netflix
continues to enter into partnerships with major film
studios and production houses, which include names such as
DreamWorks Animation, The Wachowskis (creators of
trilogy) and J. Michael Straczynski (
), Gaumont International,
) Pictures and The Weinstein Company.
Apart from this, Netflix has also entered into a partnership
) Marvel Entertainment. Per the deal, the company will roll out
at least four new 13-episode series and a mini-series based on
characters such as Daredevil, Jessica Jones, Iron Fist and Luke
Cage which will be broadcast on Netflix beginning 2015.
These deals are important for the company and are expected to
boost revenues much faster. We believe that improved optimism
over its future results prompted Netflix to terminate the poison
pill provision so early.
Moreover, these deals are expected to provide Netflix
competitive advantage over peers that include HBO and
). Although increasing competition is a challenge for Netflix,
new international expansion will help the company in the long
Netflix currently has a Zacks Rank #1 (Strong Buy).
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