Netflix continues dramatic turnaround

Published:  11 Jan at 6 PM

Netflix, the DVD and video-streaming firm which saw its stock value take a nose-dive last year after announcing it had lost around 800,000 subscribers after it pushed up its prices, is continuing its dramatic come back.

In 2011, a series of mistakes by the firm saw more than three-quarters of the value wiped from shares. However, in the first week of January this year, the market witnessed Netflix stock soaring by 24.3 per cent.

This week, shares have already jumped by another 13.8 per cent to $98.18. Analysts are finding it hard to find a reason why there has been such a turnaround. The announcement that subscribers had been jumping ship in October last year saw shares drop from $118.84 to $74.90 over night.

Recently the firm published figures which show that in the last quarter of 2011, video totalling 2 billion hours had been streamed to customers. Although this number appears impressive, Netflix has never before published figures showing how much it streams, so there is nothing to say whether the numbers are improving or decreasing.

The jump in share value could be attributed to the fact that the company has just launched in the UK and Ireland, but the plans have been public knowledge for some time now. According to an article on mercurynews.com , the most likely reason for the turnaround in fortunes is the prediction by Whitney Tilson, the hedge fund manager, that without any serious competition in the market, Netflix share values are likely to continue to rise.

Tilson said that he could not see a reason why the business should not grow by 40 per cent, and that he was nowhere near the point of disposing of his Netflix shares.