Shares of Netflix were falling 3.9% to $407.73 Friday.
In a post on the Netflix blog Hastings said that strong net neutrality rules are needed so ISPs can't charge companies like Netflix, YouTube, and Skype extra fees to ensure their customers receive high-quality service. Hastings explains that without such rules Netflix will sometimes have to pay interconnectivity fees to ISPs to make sure its customers don't experience long wait times, high buffering rates, and poor video quality.
Netflix recently reached an agreement with Comcast (CMCSA) to ensure Netflix users who use the ISP have a good experience. Hasting's post directly contradicts such agreements, as he contends that "When an ISP sells a consumer a 10 or 50 megabits-per-second Internet package, the consumer should get that rate, no matter where the data is coming from."
Hastings points to Cablevision (CVC) as an example of an ISP that practices strong net neutrality, saying that Netflix's quality is "outstanding" for its subscribers.
While the Netflix CEO is pushing for stronger net neutrality rules he acknowledges that for now the company may make more deals similar to the direct-access Comcast deal. Hastings closes the blog post saying "While in the short term Netflix will in cases reluctantly pay large ISPs to ensure a high quality member experience, we will continue to fight for the Internet the world needs and deserves."
TheStreet Ratings team rates NETFLIX INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NETFLIX INC (NFLX) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 24.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 507.69% and other important driving factors, this stock has surged by 123.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- NETFLIX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, NETFLIX INC increased its bottom line by earning $1.85 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($4.04 versus $1.85).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 513.1% when compared to the same quarter one year prior, rising from $7.90 million to $48.42 million.
- The gross profit margin for NETFLIX INC is currently very high, coming in at 82.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 4.12% is above that of the industry average.
- You can view the full analysis from the report here: NFLX Ratings Report