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Netflix's Hastings cautiously celebrates spike in stock price

With a resounding third-quarter profit and record high share prices, the video streaming service's CEO says it's best to focus on increasing subscribers and "ignore the volatility in our stock."

"House of Cards" is one of Netflix's popular original series. Netflix

Netflix's investors are most likely jumping off the walls today. The video streaming service came out with its third-quarter earnings on Monday, and the results are good news all around -- profit is up, revenue is up, and stock is way up. In fact, the company's stock has hit a record high of $392 per share in after-hours trading.

Despite the excitement centered on Netflix's new numbers, the company's CEO, Reed Hastings, has cautioned shareholders not to get too hyped about the skyrocketing stock price. Because, as Netflix well knows, what goes up often comes back down.

"In calendar year 2003 we were the highest performing stock on Nasdaq. We had solid results compounded by momentum-investor-fueled euphoria," Hastings wrote in his letter (PDF) to shareholders. "Some of the euphoria today feels like 2003."

"Despite the huge swings in our stock price since our 2002 IPO ($8 to $3 to $39 to $8 to $300 to $55 to $330), we've continued to grow our membership every year fairly steadily. We do our best to ignore the volatility in our stock," Hastings continued. "The progress we've made over the last 10 years is stunning. We want to make the next 10 years even more remarkable."

Hastings attributes Netflix's recent success on new subscribers, international growth, and its stable of original programming. The streaming service now counts 31 million subscribers in the US and 9 million in other countries. It has won prime-time Emmys for its original political thriller "House of Cards" and has amassed a huge following for its prison dramedy "Orange Is the New Black."

These strides have made Netflix a serious competitor to HBO; but, as with the stock price, Hastings told shareholders that to continue on the up-and-up the company has to keep its nose to the grindstone.

"We have done well but we have a long way to go to match HBO's 114 million global member count or their well-deserved Emmy award leadership," Hastings wrote in the shareholder letter. "Title by title, device by device, member by member, award by award, country by country, we are making progress."