NEW YORK (
takeover rumors have run rampant for years, and the potential buyer is usually the same:
But how likely is this acquisition?
These rumors once again resurfaced this week, sending shares of Netflix up by more than 18% over the past three days, closing on Wednesday at $107.83. Shares of Netflix continue to surge on Thursday, up 7.6% to $116.04 in morning trading.
Analysts, however, have routinely brushed off these rumors. "Amazon would not acquire Netflix for its by-mail business, which will eventually go away," Needham analyst Charles Wolf he says. While Netflix has a terrific digital-streaming business, its library consists of mostly older films. It can't offer new releases as they are available because it is too expensive.
Amazon, itself, has a streaming pay-per-view service for new releases, and it doesn't seem that there is a barrier preventing Amazon to offer old movies, Wolf says. "So the company has little reason to buy Netflix."
Any deal could also cost Amazon close to $7 billion or more.
Still, the deal might be worth it, as Netflix has been a successful growth story, adding 1.7 million subscribers during the first quarter, its biggest gain in its 11-year history.
The DVD-by-mail retailer had a stand-out first quarter, earning $32.3 million, or 59 cents a share, a 44% surge over $22.4 million, or 37 cents, in the year-ago period. Analysts were calling for earnings of 54 cents a share for Netflix.
Netflix revenue jumped 25% to $493.7 million from $444.5 million.
The company's market share is also expected to get an even greater boost after No. 2 DVD rental company
said earlier in the week it will shutter all of its stores and go into liquidation.
So what do you think? Will Netflix actually be purchased by Amazon?
Take our poll below to learn what the rest of
thinks -- and don't be afraid to leave a comment.
-- Written by Jeanine Poggi in New York
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