Netflix stock rocketed up 32 percent last week, but took a slight dip on Monday. Investors are encouraged by the addition of 2 million U.S. subscribers in the first quarter and signs that the company’s profit margins are improving. Netflix is the best-performing stock in the Standard & Poor’s 500 index this year, up 132 percent.
The next challenge for the video subscription service is to prove that its growth prospects are stronger than a “House of Cards.” That’s the name of a critically acclaimed series, made exclusively for Netflix, that has helped drive recent results. The show marked a move toward making Netflix more of a direct competitor with HBO, by offering series that can’t be seen anywhere else.
“House of Cards,” stars Kevin Spacey and reportedly cost the company $100 million. That fueled fears that the company might be spending too much. But the success of the series came as no surprise to Netflix. In launching the show, Netflix gathered a wealth of data on user viewing habits to ensure there would be a large audience for Spacey, for political thrillers, and for the show’s director, David Fincher, whose directing credentials include the film “The Social Network.”
Another original series, “Hemlock Grove,” debuted on April 19 with strong viewership.
Netflix shares first topped $200 in January 2011, and briefly eclipsed $300 six months later. But by October, the stock had plunged below $100 after Netflix outraged U.S. subscribers by raising prices, by as much as 60 percent, for customers who wanted dual access to Internet video and a DVD-by-mail option.
Now it looks like CEO Reed Hastings – an object of scorn when the company’s stock was plunging – has found more supporters on Wall Street.Associated Press