Where Will Netflix Trade in 2012?
NEW YORK (TheStreet) -- Netflix (NFLX) is up 22% for the first week in the new year, giving hope to investors that the stock could rebound in 2012 after the company's blunders in 2011.
Netflix, it seems, is getting a fresh start and is the best performing stock in the S&P 500 so far in 2012. The stock surged on Wednesday after the company reported that subscribers streamed more than 2 billion hours of movies and television shows in the fourth quarter.
The stock has continued to rally, up more than 9% on Friday on no real news.
But the new year didn't wipe the slate clean, and Netflix still faces many of the same issues it ended 2011 in addition to some new forces to contend with.
On Thursday, The New York Times reported that HBO, which is owned by Time Warner (TWX), will stop giving Netflix discounts on the DVDs it buys to rent to customers. It will now charge the company retail price for physical discs of shows like True Blood and Boardwalk Empire. According to reports, Warner Bros. also plans to double its current 28-day DVD window for new releases to 56 days for rental outlets including Netflix, Redbox and Blockbuster. Netflix ended 2011 down more than 60% to $69.29, and was about 77% off its July high of nearly $300 after the company made several strategic blunders. Management decided to raise prices on its most popular one DVD-by-mail and unlimited streaming package by 60%. The increase was spurned by subscribers, who criticized the company for the way it approached raising prices. The company also failed in negotiations to renew its streaming contract with Liberty Starz, which means Starz content will be pulled from the service come February. In the throes of customer and Wall Street dissatisfaction and grasping at straws, Netflix made a surprise announcement in September that it planned to separate its DVD-by-mail and streaming services into two businesses. The streaming service would remain under the Netflix banner and the DVD segment would become a new business called "Qwikster."Select the service that is right for you!
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