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Investors Snap Up Shares of Netflix in Initial Nasdaq Trading

NEW YORK -- It's amazing what dropping the "dot-com" from your name can do for an initial public offering.

Netflix Inc. , an online entertainment company that, when known as NetFlix.com had to once cancel its IPO, opened higher initial trading Thursday.

Shares of the Los Gatos, Calif. , company opened on the Nasdaq Stock Market at $16.19, 7.9% above the $15 price set on its IPO of 5.5 million shares. Near midday, the shares traded even higher at $16.95.

The offering, led by Merrill Lynch & Co . Inc. (MER), priced at the high end of price talk of $13 to $15 a share, an unusually aggressive pricing in what has been a tough market for unprofitable technology IPO hopefuls.

"To price at the top of the range, we were very fortunate," said Reed Hastings, the company's chief executive, in an interview.

Netflix is the country's best-known online entertainment subscription site, allowing users to rent three DVDs a month for a monthly subscription charge of $ 19.95.

One of Netflix's biggest advantages is its subscription model, said George Nichols, an analyst with Morningstar.com in Chicago .

"These ongoing billing relationships, rather than one-time purchases, have annuity-like characteristics that provide a steady revenue stream," he said.

It also has some growth trends in its favor, Mr. Nichols said. "As far as consumer technologies go, DVD is still relatively young, and many new DVD players are being sold as the mass market fully adopts it."

The business isn't yet profitable, though the company has been narrowing its losses. In the first quarter, Netflix logged $30.5 million in revenue, for a $ 4.5 million net loss. In the comparable period in 2001, it lost $20.6 million on $17.1 million in revenue.

For Netflix, the offering marked a success after failing to come to market two years ago. Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.

The offering was revived in March of this year, but with new terms. The company filed to sell as much as $115 million through Merrill Lynch, though, in the end, the offering raised $82.5 million.

Netflix's Mr. Hastings said he believes that the proceeds now will "give pause to our competitors" and allow the company to more aggressively market its services free to potential customers. Nine of 10 people who receive Netflix free initially end up subscribing, he said.

The challenge to the business is twofold, Mr. Hastings said. Blockbuster Inc. (BBI) recently said it would get into the mail-rental business, putting it into direct competition with Netflix.

The other, Mr. Hastings said, was getting people to feel comfortable renting DVDs online and receiving them through the mail, a process that "just sounds odd to people until they try it," he said.

Netflix featured one of the odder risks to its business in the offering documents filed with the Securities and Exchange Commission: the U.S. Postal Service. If the Postal Service does indeed raise rates this summer, it "will adversely affect our gross profit if we elect not to raise our subscription rates to offset the decrease."

Customer satisfaction might also take a hit if the Post Office stops Saturday delivery and customers can't get their DVDs in a timely fashion, Netflix said.
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1355You know your analysts done screwed up when they missed on domestic subscriber gIntelim-Wednesday
1354I don't own any now but as soon as this looks bullish I'll consider swinmore100-Wednesday
1353It looks like a bloody market day with futures down. How low will it go? They remore100-Tuesday
1352Hastings and Netflix never give "guidance" that way; they share their Sr K-Tuesday
1351Netflix blew its Q2 subscriber numbers, and blamed it on press about its price hGlenn Petersen1Monday
1350Letter to Shareholders files.shareholder.comJakeStraw-Monday
1349 bloomberg.com Netflix to Stream ‘Star Trek’ Episodes to Global Subscribers JSr K-Monday
1348The July 13 episode of Chelsea was another good one. She interviewed Vicente FoxSr K-July 14
1347I can already see SWAT teams banging on people's doors because they share a Intelim-July 13
1346Sharing Netflix or HBO Go Passwords Is Technically Federal Crime Under 9th CircuGlenn Petersen1July 12
1345The Friday (7/8) episode of Chelsea ended with about 20 seconds promoting a nextSr K-July 12
1344'When everyone starts downgrading a stock, it's usually time to buy.'more100-July 12
1343Thank you for sharing, one of the best articles on Netflix I've ever read!Intelim-June 20
1342Can Netflix Survive in the New World It Created? It helped to develop all the nGlenn Petersen5June 19
1341NFLX is so overvaluated, is burning his cash, look at the last quarters Cash FroGColoB_90-May 31
1340(5/25/2016) Reed Hastings (CEO,DIR) of Netflix Inc. (NFLX) sold 85,659 shares atGColoB_90-May 31
1339Netflix CEO Reed Hastings On The Future Of Streaming, Competition and More entm.GColoB_90-May 31
1338Netflix could be forced to spend up to 26% of its French revenue bankrolling EurTimF-May 26
1337Short 102.40 put in 2000 shares filled 1000. Can't believe they gave me thatmore100-May 26
1336Bulls get another strong day and so far nothing suggests it will reverse before more100-May 24
1335Will the market help the bulls to prove they can take the price at the breakout more100-May 23
1334Still amazes me how no one wanted this stock at $10 in the yr. 2012, yet so manymore100-May 17
1333I can understand people being irritated by the 'region locks'. If they rIntelim-April 26
1332Netflix CEO Says Annoyed VPN Users Are 'Inconsequential' from the you-meTimF2April 26
1331Is $NFLX becoming the 2016 short play of the year??? That would not be cool at amore100-April 26
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