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AAA  Jul. 24, 2013
House of cards?
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Netflix stock has a habit of moving sharply the day after the company reports earnings, and it did that again Tuesday. The company reported terrific second-quarter earnings Monday; net income more than quadrupled. But Wall Street focused on subscriber growth and the stock fell 4 percent.

Investors were disappointed that its revival of the comedy series "Arrested Development" only helped attract 630,000 U.S. streaming subscribers in the second quarter. That number was slightly above the mid-point of management's guidance, but was below Wall Street's expectations. There are seasonal differences in subscriber growth, but Netflix added 2 million U.S. streaming subscribers in the first quarter.

Netflix is the top performing stock in the Standard & Poor's 500 index this year, up 170 percent. Even so, financial analysts have an average "hold" rating on the stock. Many express caution because of Netflix's dramatic run. Several cite the price of the stock relative to the company’s expected earnings over the next 12 months, currently a ratio of 102.

Associated Press
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