It's increasing its streaming service. It's capturing more customers. It's crushing its rivals like so many cockroaches. It's good to be Netflix ( NFLX - Get Report). And it got especially good today, when the DVD-delivery service was upgraded by an analyst at Wedbush Morgan to buy from hold, sending shares soaring 7% to close at $40.40. "The company continues to attract customers from brick and mortar chains, and continues to retain customers by offering its unique streaming proposition," Wedbush Morgan analyst Michael Pachter wrote in a note. Netflix has been steadily **growing market share, and is poised to surpass Blockbuster ( BBI) as it ramps up its streaming service, cutting postage costs for physical DVDs and boosting profit margins.** It begs the question: Why would anyone drive to a Blockbuster store when they can get DVDs delivered straight to their mailbox or home computer? The answer: They're not. In April, Netflix posted a 68% surge in first-quarter earnings to $22.4 million, or 37 cents per share, and said it has added 1.6 million subscribers since September, giving it more than 10 million customers.
Blockbuster, on the other hand, saw profits plunge 42% in its first quarter, to $24.9 million, or 12 cents a share. And while investors may fear that newcomer Redbox -- which has DVD kiosks in retail outlets such as Wal-Mart Stores ( WMT - Get Report) and J.C. Penney ( JCP - Get Report) -- may pose a risk to Netflix, Mark Mahaney, analyst at Citi, said in a note on Wednesday the threat is actually to Blockbuster, and other rental chains. Redbox, which is owned by Coinstar ( CSTR - Get Report), is more popular for new releases, while consumers turn to Netflix for older films, Mahaney wrote.