Netflix Passes $100 With a Side of Post Office Love

NEW YORK ( TheStreet) -- On Dec. 19, I wrote that Netflix ( NFLX) would cross $100. And here we are. As of Friday's close, NFLX is a $101.29 stock.

On one hand, it makes sense. This is a much better company than it was in 2011 when I called the play-by-play of its demise over at Seeking Beta. As I explain in the above-linked article and others here at TheStreet, Reed Hastings runs a more focused Netflix today than he did back then.

While Hastings denies a shift in strategy, it's clear one has taken place.

Netflix picks and chooses content deals now, as opposed to throwing money at anything that walks. Hastings let Starz go without a fight, but he jumped to snag first-run movies, at a hefty price, from Disney ( DIS). That's because Kids TV has become a Netflix cornerstone.

Along similar lines, Netflix collects fewer sitcom reruns these days and more previous seasons of big (or potentially big) cable-TV series. While you cannot stream Golden Globe sweeper Homeland on Netflix yet, you can access AMC Networks ( AMCX) hits such as Mad Men and Breaking Bad. This type of programming does so well on Netflix that AMC credits Netflix for pumping ratings during fresh seasons of Mad Men on cable.

At the same time, NFLX as a $100 stock -- again (!) -- makes absolutely no sense. In fact, it's scary. Not quite as extreme, but reminiscent of the 2011 magic carpet ride past $300.

Investors should classify the positives I list as encouraging, not reason to run the stock up. That said, if you pay attention, you know how NFLX moves -- often on air -- so this pretty much straight line up comes as no surprise; thus, my call to buy shares last year.

Fittingly, with a big Netflix original series -- House of Cards -- set to debut Feb. 1, the stock becomes just that again. Proceed with caution because, even with the encouraging signs, this run might not end well.

For all the improvements, Netflix hasn't shaken the problems a few of us started writing about nearly two years ago. Massive off-balance sheet obligations. Absolutely no leverage in negotiations with most major content providers. A dying DVD division that no longer effectively subsidizes streaming. And so on.

The big one for me is the DVD thing. That doesn't get enough play. Reed Hastings made the DVD irrelevant a long time ago.

That's likely why Friday afternoon's news that the U.S. Postal Service needs to explain why it gives Netflix DVDs preferential treatment over, say, Gamestop video games flew under the radar.

It's worth a few sentences simply because it's an interesting case. The Post Office gives Netflix its own bins and handles the company's DVDs by hand. USPS processes everybody else's DVDs, video games and such via the standard and inferior auto-sort system. What does Gamefly expect?

In the red envelope's heyday, the post office really had no other choice. Did you ever see a mail carrier's bag when Netflix DVD was peaking? There's nothing even close to that level of ubiquity now, not even ( AMZN) boxes or election booklets in October.

But the DVD's dead now. Hastings made it Netflix's redheaded stepchild and proceeded to kill it. He put his money not only on streaming and international expansion, but on original programming. It must succeed in a big way for Netflix to win.

Over the weekend, I ran into somebody who works on a team that produces Netflix original programming. This person echoed my thoughts -- if the original programming doesn't take off Netflix is finished.

In other words -- and this is me talking here -- Netflix needs to hit a level somewhere within spitting distance of HBO. If it doesn't . . . if more than one of its original shows fails to catch on, we'll see another massive NFLX crash from these new highs. Because, make no mistake about it, while NFLX will gyrate, this thing's going to keep climbing. It has nine lives. I've lost count how many it has used so far.

--Written by Rocco Pendola in Santa Monica, Calif.
Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.