{"id":242171,"date":"2010-01-28T10:34:00","date_gmt":"2010-01-28T15:34:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/netflix-stock-soars-as-haters-retreat-2010-1"},"modified":"2010-01-28T10:34:00","modified_gmt":"2010-01-28T15:34:00","slug":"netflix-just-shocked-the-bears-nflx","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/242171","title":{"rendered":"Netflix Just Shocked The Bears (NFLX)"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"float_right\" src=\"http:\/\/static.businessinsider.com\/image\/4aa6b7ef34dccf6c75a18712-366-274\/bears-looking.jpg\" border=\"0\" alt=\"Bears Looking\" width=\"366\" height=\"274\" \/><\/p>\n<p>After delivering solid earnings, and<a href=\"http:\/\/www.businessinsider.com\/live-netflix-q4-earnings-analysis-2010-1\"> better than expected guidance<\/a>, Netflix&#8217;s stock has taken off, rising 22% today.<\/p>\n<p>The positive results forced bearish analysts like Barton Crockett of Lazard  to retreat.<\/p>\n<p>Two weeks before earnings came out <a href=\"http:\/\/www.businessinsider.com\/netflix-subscriber-growth-to-be-smaller-than-expected-2010-1\">Barton downgraded the company to a sell<\/a>. He didn&#8217;t think Netflix could maintain its growth. He thought subscriptions would come in on the low end.<\/p>\n<p>He was wrong. Subscriptions came in higher than expected.<\/p>\n<p>He&#8217;s revised his thinking on the company, and is upgrading it to hold. Here are the three key points from his note this morning:<\/p>\n<ul>\n<li> <strong>Churn drop drives new stance<\/strong>; upgrading to HOLD from SELL. After rising  all year, a 4Q09 plunge in churn drove subscriber growth to the high end of  management&rsquo;s guidance, versus our expectation for the low end. This, plus  guidance for more churn improvement in 2010, argues that the streaming feature  is improving sub loyalty, something not at all evident in earnings reports to date,  prompting us to up estimates and our rating. <\/li>\n<li> <strong>comScore correlation variance widest ever, but churn\/free trials drove  upside<\/strong>. Reported gross adds of 2.803 million were 165,000 above our 2.638M  estimate, and 21% above the level predicted in the comScore correlation, the  widest variance ever for data going back to mid 2005. However, net sub growth of  1.159M to exit at 12.268M was 268K above our estimate to exit at 12.0M. The  delta between the gross add and net add variance was a surprising drop in churn to  3.9%, down 30 basis points y\/y, after rising 20 to 30 basis points all year. Churn  fell 50 basis points q\/q, the biggest drop ever. Free trial subs were 3.1% of the  total, vs. 2.4% last year. Had churn and free trial subs remained constant y\/y (our  assumption), subs would have exited at 12.14M, the lower half, which had been  our call. <\/li>\n<li> <strong>Guidance for more churn drops prompts rating chang<\/strong>e. Switching gears from  the previous stance, management guided for more churn drops this year. This  suggests that the 4Q09 churn upside was more than a late quarter push for free  trials, which some skeptics argued to us. So we&rsquo;re upping 2010E EPS to $2.53  from $2.06, and 2010 sub growth to nearly 4M from 2.5M. We have a HOLD  rating, based on valuation, assuming an after-hours price of $59.80 for a P\/E near  24 and a PEG near 1x. Online streaming subscription competition is likely heating  up over time, but Netflix is playing in a largely open field at the moment.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/www.businessinsider.com\/netflix-stock-soars-as-haters-retreat-2010-1#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><b>See Also:<\/b><\/p>\n<ul>\n<li><a href=\"http:\/\/www.businessinsider.com\/netflix-subscriber-growth-to-be-smaller-than-expected-2010-1\">Netflix Downgraded To SELL<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/live-netflix-q4-earnings-analysis-2010-1\">Netflix Q4 Fine, Guidance Strong<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/netflix-half-of-subscribers-stream-movies-online-2010-1\">Netflix: Half Of Subscribers Stream Movies Online<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/hOXvoF4DVe0\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>After delivering solid earnings, and better than expected guidance, Netflix&#8217;s stock has taken off, rising 22% today. The positive results forced bearish analysts like Barton Crockett of Lazard to retreat. Two weeks before earnings came out Barton downgraded the company to a sell. He didn&#8217;t think Netflix could maintain its growth. He thought subscriptions would [&hellip;]<\/p>\n","protected":false},"author":504,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-242171","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/242171","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/504"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=242171"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/242171\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=242171"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=242171"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=242171"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}