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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 Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.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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1174$NFLX closed down 6.81 percent on Monday, August 24, 2015, on 2.94 times normal more100-last Tuesday
1173I think that poster is a bot script.FUBHO1August 20
1172LOL, NFLX down <$2 in pre-market, ~ $6 from it's all time high. Did youJ.B.C.-August 20
1171$NFLX it's melting. Today will be more cheaper more100-August 20
1170Sloppy editing. But the conclusion is the "risk / reward [is no longer theSr K-August 19
1169Netflix: The Largest Global TV Network? UBS Ups 2020 to 2026 Numbers blogs.barroJakeStraw-August 19
11685:04 PM ET Aug 13, 2015 blogs.wsj.com Netflix to Pull Plug on Final Data CenteSr K-August 13
1167SPX hit a new high in July, NFLX hit a new high this month. The market right noJ.B.C.-August 11
1166$NFLX stock closed the last trading session -0.4% lower even as the S&P 500 more100-August 11
1165Watch for a break of $122.79 to continue the uptrend. Technical buy at stoxline,sfnsie-August 5
1164All-time high, $118.44.Sr K-August 4
1163I don't think I have watched or liked any Netflix original series. But thenJurgis Bekepuris-August 3
1162My shares are in a "Not-for-sale" position.J.B.C.-August 1
1161How Netflix plans to blow past HBO with original programming vulture.comRon1August 1
1160All true. My own idea is that because they have so little competition(prime?) tTamson Fischer-July 30
1159Don't you find it puzzling that such a cutting edge company appears to have Jurgis Bekepuris1July 29
1158Don't you find it puzzling that such a cutting edge company appears to have Tamson Fischer-July 29
1157Telecom Italia inks deal with Netflix finance.yahoo.comJakeStraw-July 29
1156On a related note I find Netflix's search functions a bit hazy with respect Jurgis Bekepuris-July 29
1155I heard they were going to take-on their web site and improve its functionality.J.B.C.-July 29
1154We still get them as well. I've always assumed that some film rights excludTamson Fischer-July 29
1153I still get DVD's, until their whole library is digitized by my way of thinkJ.B.C.-July 29
1152Still getting Netflix DVDs (+ streaming). Great way to get movies that are not aJurgis Bekepuris-July 29
1151 While Its Streaming Service Booms, Netflix Streamlines Old Business J.B.C.2July 27
1150Here Are the Release Dates for Netflix’s First Original Movies bgr.comTimF1July 16
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