Bloomberg News

Netflix Rises Most in Year to Bring 2012 Gain to Over 40%

January 10, 2012

(Updates with analyst’s comment on Web traffic.)

Jan. 9 (Bloomberg) -- Netflix Inc., the film-streaming and mail-order DVD service, rose the most in almost 12 months, bringing its gain for the new year to more than 40 percent.

Whitney Tilson, managing director of T2 Partners LLC, told CNBC Netflix was rising on buyout rumors and prospects for subscriber growth in its U.S. streaming business and internationally, including the U.K. service that started today. Tilson bought Netflix at around $77 after unwinding a bet the stock would decline last year.

Netflix, based in Los Gatos, California, rose 14 percent to $98.18 at 4 p.m. in New York, its highest close since Oct. 24. The gain marked the largest one-day jump since Jan. 27, 2011, and made Netflix the biggest gainer today among S&P 500 index members. The stock lost 61 percent in last year.

Chief Executive Officer Reed Hastings, in the U.K. for the debut of the company’s service there, said in an interview with PaidContent.org that the company was mostly over the transition from splitting its streaming and mail-order businesses into separate services. Streaming subscribers now constitute a majority of the customer base, he said.

Steve Swasey, a Netflix spokesman, declined to comment on the buyout speculation.

The company is sticking to its forecast that subscriber growth turned up in December after falling for two months, PaidContent.org reported.

Netflix’s U.S. streaming business is likely to grow along with the total industry rate of 30 percent to 40 percent, Tilson said. The international business will probably grow faster, he said.

Visitors to the company’s U.S. website increase 52 percent in December from a year earlier, Mark Mahaney, a Citigroup Inc. analyst, said today in a note to investors, citing ComScore.

The increase implies a “very positive trend” given the negative publicity surrounding the company’s aborted plan to rename its DVD service Qwikster and a drop in subscribers, said Mahaney, who has a “neutral” rating on the stock.

--Editors: Anthony Palazzo, Rob Golum

To contact the reporter on this story: Rob Golum in Los Angeles at rgolum@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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