Everyone's beating on Netflix (NASDAQ: NFLX) because they split their video on demand service from their DVD mailing service. Now subscribers will have to pay double if they want both services. Netflix stock dropped by about half its value after it announced it lost over a million subscribers. However, shareholders have jumped the gun by selling their stock at the current low price -- especially since major brokers have set a target price between $200 and $250 for the stock.
The bottom line is, the press attention to the price increase made Netflix more popular rather than less popular. Many people did not know Netflix offered unlimited movies to watch online for less than $10. Secondly, losing a million customers when you have twenty million customers is no big deal considering that the customers who stay will be paying more.
The so-called outrage by 5% of Netflix customers does not eclipse the great news about the Company. Specifically, Netflix is now offered through Central America including Mexico. New distribution deals with media companies provided more movies that enable Spanish viewers to watch them in their own language.
We rate Netflix a buy and purchased 400 shares of its common stock on the open market. We believe that Netflix's price increase will enhance shareholder value.
More information about Netflix can be obtained from their website, http://www.netflix.com .