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Netflix (NFLX)
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Emcee:  Glenn Petersen Type:  Unmoderated
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 Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.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

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1444Netflix: A Buy On Price Pullback seekingalpha.comKrigannie-yesterday
1443That's pretty damn impressive. Can't watch their superhero shows thoughKrigannie-yesterday
1442I would say the entire chart looks pretty damn impressive. Way to go NFLX!Intelim-Wednesday
1441Netflix Has Become the No. 1 Grossing iPhone App in the U.S. Sensor Tower Blog Glenn Petersen2Tuesday
1440Bullish crossover in MACD and Stochastic oscillator. [graphic]hollyhunter-Monday
1439I don't think it will break the price but yeah, I can see it going up a bit.Intelim-Sunday
1438Will this news affect the stock? Krigannie-last Friday
1437Great news, I guess. Not sure why they waited for so long. Doubt I'll use iKrigannie-last Friday
1436Agreed. That's what I thought as well. Krigannie-last Friday
1435Oh gosh, yes!!! The life is getting better by day.Intelim-November 30
1434Netflix Unveils Download Feature for Offline Binge-Watching Lucas Shaw NovembSr K3November 30
1433SO they want people to pay for the service only a handful of countries can use? Intelim-November 29
14323 Things Wall Street Loves About Netflix fool.comKrigannie-November 26
1431Amazon Is Serious About Taking On Netflix fool.comKrigannie-November 26
1430Since the shares are going down by 8% is it safe to invest in these sharesDouglas Hall-November 21
1429Yeah right. Stole my words!!!James Donovan-November 21
1428Netflix shares are down about 8% since President-elect Donald Trump won the presjohnmartin-November 21
1427and the best part is you don't have to wait for long weekends to watch a epijohnmartin-November 21
1426Netflix creates better shows than on TVJames Donovan-November 21
1425i just love watching and trading netflix.legendwhite-November 16
1424This is something that I love about Netflix as well. A big fan of binge watchingIntelim-November 11
1423It's a good thing they release the whole season at once. So you can watch thKrigannie1November 11
1422I need to clone myself to catch up with all the good stuff Netflix produces.Intelim1November 10
1421Next year NFLX will spend on Original Content even more than in 2016. Six billioKrigannie-November 9
1420At this point I already have too much to watch... Definitely adding this one to Intelim-November 8
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