Netflix (Nasdaq: NFLX) stock had a very short-lived boost from Monday's earnings report.
The earnings report showed great news for the company - Netflix reported it ended Q3 with 29.3 million paid domestic users. The video streaming giant added 1.3 million U.S. customers in the third quarter and is on track to surpass Time Warner's HBO in paying viewers.Here's what all this will mean for Netflix stock in 2014...
Buy, Sell or Hold: Why Investors Need to Tune in to Netflix
In the new age of media all roads lead to streaming content. Whether it's music, movies or TV Shows, how entertainment gets delivered is never going to be the same.
As this secular change takes place, traditional media companies are now scrambling to get their piece of action.
Where this "movie" really gets interesting for investors is the path they are going take to claim their share of the streaming pie - especially if you own Netflix, Inc. (NASDAQ: NFLX)
That because Netflix has laid the groundwork to be the leader in the new world of streaming media. And on Jan, 23, the plot thickened even more when the company reported its Q4/2012 earnings and blew away everyone's expectations.
Netflix posted earnings per share of 13 cents on revenues of $945 million. Both handily beat consensus estimates, which called for a loss off 13 cents per share and revenues of only $934 million.
But one of the most important items for investors to note from the earnings release was that Netflix added over 2 million new domestic subscribers (at $7.99 per month) in the fourth quarter. In all, NFLX ended the year with 25.47 million paid subscribers - well ahead of expectations.
As a result, the company's is up 66% in eight trading days. The rocketing share price has pushed its trailing 12-month P/E up to 578 and the forward P/E to 60.
Now ordinarily gaudy numbers like these would make me pass on a company like this as an investment - but "hold" on while I make a case for Netflix.