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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 Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.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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1090Netflix, Amazon and Hulu No Longer Find Themselves Upstarts in Online Streaming Glenn Petersen-Wednesday
1089Screw the theaters.Jurgis Bekepuris-March 5
1088Theaters dig in heels, refuse to show Netflix’s Beasts of No Nation Cinema chaTimF2March 5
1087Viewers in Cuba will be able to watch shows such as "House of Castro" Jurgis Bekepuris-February 10
1086bloomberg.comSr K1February 9
10855 big takeaways from Netflix's stellar Q4 earnings report news.investors.comJakeStraw-January 21
1084AH high 401.67.Sr K-January 20
1083Netflix adds 4.3 million streaming subscribers, shares soar (Reuters) - NetflixGlenn Petersen-January 20
1082So far + $42 in AH trading.J.B.C.2January 20
1081Netflix comes to Dish's TV set-top boxes engadget.comJakeStraw-12/17/2014
1080Why did Netflix take so long to get to Australia? IMO, australian users won'JJ7722-12/1/2014
1079How to Build an Empire, the Netflix Way By EMILY STEEL New York Times NOV. 29, Glenn Petersen211/29/2014
1078An Interview With Analyst Daniel Ernst On Battleground Stock Netflix forbes.comJakeStraw-11/18/2014
1077NFLX has been showing support at 331.00 and resistance at 415.66. Technical 69% sfnsie-11/11/2014
1076Netflix gets ready to launch in Australia next year finance.yahoo.comJakeStraw-11/5/2014
1075John Oliver calls it " cable company f*ckery" and we've all suspeczax110/30/2014
1074Responding to DVD subscription decline, Netflix closes call center By Janko RoFUBHO110/24/2014
1073Great idea. As a non-content provider, MFST would have the advantage of not compGlenn Petersen110/17/2014
1072It would be a good way for Microsoft to become relevant again, since they donFUBHO210/17/2014
1071If you're referring to pages 27-28 of the 6/2014 Proxy Statement, as of Apr Sr K-10/17/2014
1070Neither company would have any major anti-trust issues. An interesting note: HasGlenn Petersen-10/17/2014
1069With a $21 billion market cap, NFLX would be easily digestible for one of the laGlenn Petersen110/17/2014
1068In an interview on CNBC, Mr. Cuban said he owns more than 50,000 shares of NetflJakeStraw-10/17/2014
1067Netflix Q3 2014 Earnings Call Transcript screen.genius.comJakeStraw-10/17/2014
1066Glenn, There has been chatter about Apple buying NFLX... Or maybe a company likeJakeStraw-10/17/2014
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