Netflix (NFLX) gained 22%, rising from $240 to $280 after posting strong subscriber growth. Investors
believe the dark days for the streaming leader and incumbent are over.
Netflix posted 2.41 million net new subscribers. This is double the one million new subscribers it
previously forecast. It ended the quarter with 223.1 million subscribers. CEO Reed Hastings expressed his
content for positive user growth.
Investors who bet the company reported growth ahead of its ad-supported tier should hold the stock. The
ad-tier rate is less expensive. It will win back customers it lost due to ever-increasing monthly rates.
Netflix’s stock surge will lift the sectors. This includes Paramount (PARA) through its Paramount
service.
Comcast (CMCSA) runs an inexpensive Peacock streaming service. Apple (AAPL) is spending heavily
on growing its Apple TV service. And Disney (DIS) has the most to lose if customers choose Netflix’s
ad-supported service.
High Debt, High Costs
Netflix is the Tesla (TSLA) of the electric vehicle market. It is the first in the streaming market. It is best
positioned to outflank its competitors. Others are increasing debt and spending heavily on content.
Ultimately, Netflix's content spending must return more subscriber sign-ups and profits than its
competitors.
That is the only way for Netflix to come out ahead.
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