This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Don't Turn Off Netflix

NEW YORK ( TheStreet) -- There's always plenty of drama with Netflix (NFLX - Get Report).

It's common knowledge the company, which started as a DVD-by-mail model, has pioneered new ways for consumers to receive movies and TV shows via its streaming technology. But many are unaware that it was Reed Hastings, Netflix's CEO, who, by posting on his personal Facebook (FB) page, forced the hands of the Securities and Exchange Commission to adopt social media as a legitimate outlet for corporate disclosures.

Like him or hate him, Hastings is good for Netflix and he's good for the stock market. There's never a dull moment. But does that mean the company, which many are struggling to love, is still a good long-term buy for investors? On Monday, these questions were once again raised.

Netflix, which I've once described as having had more lives than "24's" Jack Bauer, experienced another brutal episode during the after-hour session Monday, down by as much as 8% following what was (on balance) an excellent second-quarter earnings report. Investors were turning off Netflix even though the company beat profit estimates, while revenue were in line with Street projections. Guidance, however, didn't make the cut. But I wouldn't get carried away just yet.

The company reported 49 cents in earnings per share on revenue of $1.07 billion. These results blew last year's marks out of the water when Netflix reported profits of 11 cents per share on revenue of $889 million. Essentially, not only has Netflix grown revenue 20% year over year, but EPS has spiked more than 300%. What's more, the company beat the consensus EPS estimate by 22%.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/11985080/1/apple-maps-oh-the-places-it-wants-to-go.html"><em>Apple Maps: Oh, the Places It Wants to Go</em></a>]

Hastings has been able to grow the company despite all of the threats that pundits are quick to toss at him including Amazon's (AMZN) Prime, Time Warner's (TWX) HBOGo and Hulu. That Netflix has been able to string two consecutive quarters of impressive growth should now dispel concerns about the company's ability to execute.

The company's "grow at all cost" concept makes it hard for "traditionalists" to fully embrace the stock -- I get that. But these same pundits don't seem to mind raising the pom-poms for Amazon, which embraces similar ideals of "If you build it, they will come."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
NFLX $655.45 -0.23%
AAPL $126.60 0.94%
FB $86.91 1.34%
GOOG $521.84 0.26%
TSLA $269.15 0.33%

Markets

DOW 17,757.91 +138.40 0.79%
S&P 500 2,077.42 +14.31 0.69%
NASDAQ 5,013.1230 +26.2560 0.53%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs