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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 Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.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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1297Netflix (NFLX) Stock Climbs on Rating UpgradeIntelim-last Tuesday
1296nflx over 92.34 gets me long looking to sell half for +2 the stops at flat lookiSybilNicolas-last Monday
1295A big ouch! Threading water in this one, anymore dip and I wont be a millionairemore100-January 28
1294I totally need a pair of these!Intelim-January 25
1293nflx ceo and founder reed sold 86993 shares last week. now at least we have someSybilNicolas-January 25
1292I'm in a hotel now, connecting through hotel wifi. I watched a Netflix showTimF-January 23
1291Yes, that's what I told my broker: "I told you to buy Netflix socks, noJurgis Bekepuris-January 22
1290 Netflix Socks [graphic] <a class="NoDisplay" id=&quSavant-January 22
1289I lean more towards 200$. More realistically around 160-170$. Things are lookingIntelim-January 22
1288NFLX was $123 in AH 2 days ago. Yesterday at $97+. Nobody knows where this stockSybilNicolas-January 22
1287$NFLX I don't think this stock is going to give up so easy. Especially aftermore100-January 22
1286$NFLX pierced support through $105 & $100 support then clawed its way back umore100-January 21
1285After earnings, analysts have mixed reviews on this stock... though mostly bulliMike Strauss-January 20
1284Netflix reported Q4 EPS of $0.10, which may not compare with the analyst estimatIntelim-January 20
1283Netflix ($NFLX) reported fourth quarter earnings that were notably above estimatmore100-January 20
1282The "Street" has NFLX coming in at .04 for the quarter that should be drmicrocap-January 19
1281$NFLX not an impressive open indication given nasd futures up76 points. Short heTimitytt-January 19
1280Netflix’s Global Growth Faces New Threats Rivals abroad band together as competGlenn Petersen3January 17
1279Done.J.B.C.-January 16
1278Message 30409735J.B.C.-January 16
1277I see your point regarding the alphabetical search for an NFLX thread. I'llJ.B.C.-January 16
1276Look at how it was done for Qualcomm. The moderated thread is Subject 36035 aSr K-January 15
1275Do what you want SR. K. This thread is starting to be dominated by computer proJ.B.C.-January 15
1274Soon people will not be able to use proxy servers to bypass content/area restricIntelim-January 15
1273In retrospect, I'm surprised $NFLX didn't go much higher considering wheSybilNicolas-January 15
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