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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 Netflix originally filed to raise $86.3 million through Deutsche Bank in April 2000 , but the offering was withdrawn three months later as the IPO market began its long, dry period, one that still exists.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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1049This morning, the leading internet television network Netflix, Inc. (NASDAQ:NFLXinthemoneystock-Tuesday
1048NFLX is still reacting to Hastings' comments on Bloomberg Television about 5Sr K-Tuesday
1047Netflix's European invasion finance.yahoo.comJakeStraw-Tuesday
1046Netflix Inc. was reiterated as Outperform and the price target was raised to $60JakeStraw-September 9
1045Why Tiger Global Management starts new position in Netflix finance.yahoo.comJakeStraw-September 4
1044WSJ 9:47 PM Netflix Reaches Global Licensing Pact With Warner Bros. For 'GoSr K-September 2
1043WSJ Yahoo Taps Netflix VP for CIO Post Mike Kail to Lead Internet Pioneer'Sr K-August 7
1042nytimes.comSr K-July 28
1041Australians and Canadians Are Turning to Virtual Private Networks to Access U.S.TimF1July 27
1040From Feb. 14, 2013 online.wsj.com "That's why the company is named NeSr K-July 27
1039It's not funny. It shows how hard it is to predict the future. And most of tJurgis Bekepuris-July 27
1038Funny stuff...FUBHO-July 27
1037An analyst call from nine and a half years ago: Analyst cuts Netflix target to Glenn Petersen2July 26
1036From the WSJ article on Netflix's q2 cc and report, online.wsj.com UpdatSr K-July 22
1035streetinsider.com Verizon (VZ) Comments on Netflix (NFLX) Buffering; Review ShoThe Ox-July 10
1034All-time high 468.40.Sr K1July 1
1033Supreme Court kills Aereo — and cord-cutters' dreams To the dismay of cord-J.F. Sebastian1June 25
1032Aereo ruling could shake up tech stocks The Supreme Court could decide as earlJ.F. Sebastian-June 18
1031Netflix provides speed tests: wired.com ispspeedindex.netflix.com netflix.comRon3June 14
1030An ongoing issue for Netflix: ISPs Today an update from Netflix: qz.comRon1June 9
1029Reed Hastings says Netflix has no interest in making its own video-streaming devJakeStraw-May 30
1028Netflix to Expand to France, Germany Later This Year U.S. Online Video Company JakeStraw1May 21
10271st. You make a very good point about the "Big crop." Vs. "Littletripleman-May 12
1026>> In addition to those original productions I'm certain they will coni-node-May 11
1025<If they can't improve their content NFLX stands to lose share> I agTamson Fischer1May 11
1024If they can't improve their content NFLX stands to lose share.i-node1May 11
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