Netflix is both a story stock and a short-seller’s favourite, so you may want to avoid reading too much into aftermarket trading today. But if you are inclined to read tea leaves: Investors are doing handstands over Q3 numbers, and they’ve pushed the stock up 13%, to $26 or so, as of 5:40 pm.
Why the party? Because NFLX trounced earnings, revenue and subscriber estimates, then raised its own guidance for Q4. (And now 2008 as well) The bigger picture: For the past 8 years, Netflix has been just around the corner from certain doom: Blockbuster was going to crush it. Or Wal-Mart. Its growth would slow as the DVD cycle tapered off. Or its tired snail-mail based delivery system would be made obsolete by broadband delivery.
That last one could still happen, maybe, one day: Before the studios figure that out, though, they look dead set on wasting even more time on the self-destructive HD vs. Blu-Ray format war. In the meantime Netflix has continued to grow by adding subs while making itself more efficient: Perhaps most promising in today’s numbers are subscriber acqusition costs, which dropped from $45.32 a year ago to $37.91 this quarter.
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