) surged 4.2% to close at $173.01 on Apr 11, 2013, after the
company announced that its subscribers watched 4 billion hours of
streaming over the last three months. The announcement was made
on the company's chief executive Reed Hastings' personal
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The move was widely anticipated after Netflix announced its
intentions to use Facebook and Twitter to reveal material
information to investors. The company also filed with Securities
and Exchange Commission ("SEC") to that effect.
Last year, Netflix stirred a controversy when its CEO used
Facebook to reveal monthly subscriber details. Netflix was
charged by SEC for violating disclosure norms. However, the
increasing relevance and participation of the social media in
corporate communications forced SEC to revise its disclosure
SEC now allows companies to make corporate announcements over
social media platforms, including Facebook and Twitter, by
providing relevant web addresses through notifications on their
company websites and press releases.
We believe that Netflix will gain (as evident from the share
price movement) from the newly amended rules in the near term.
The strengthening social integration with Facebook will help it
win further investor confidence going forward.
The recent surge in viewership has been primarily driven by
Netflix's engaging content, in our view. We believe that more
than anything else, Netflix's superior content will be the
ultimate deciding factor in the ongoing battle for online
Netflix's new and exclusive content offerings are its
biggest assets, which set it apart from Hulu, HBO,
) as well as the newly-launched services from cable and media
companies such as
We believe that an improving paid subscriber base, international
expansion, diversified content portfolio and a huge video library
are the positives in the near term. Moreover, Netflix's own
content delivery network, Open Connect, connects its video
library directly to Internet service providers, ensuring fast
data transfer to enhance customer experience. This will further
improve customer engagement going forward.
Currently, Netflix has a Zacks Rank #1 (Strong Buy).