Why Netflix Stock Rose Last Week
Netflix stock rose 7.3% last week
Netflix (NFLX) stock rose 7.3% in the week ended January 20, 2017. After the market closed on Wednesday, Netflix posted upbeat fourth quarter earnings. It reported $2.5 billion in revenue in the fourth quarter, better than $1.8 billion during the same period last year. Netflix added 7.1 million new members in the fourth quarter, which was better than the forecast of 5.2 million. Of these, 1.9 million are domestic members and 5.1 million are international.
On January 20, 2017, Netflix stock closed at $138.6. In the past month, it has risen 10.8%, and so far this year, it has risen 12%. Netflix stock has also been buoyed by The Walt Disney Company’s (DIS) rumored interest in the company.
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Focus on original content
Netflix plans to continue to focus on original content. According to a Business Wire press release from Hudson Pacific Properties (HPP) on January 6, Netflix signed a lease for 91,953 square feet at Hudson’s new office building, CUE. Last year, Netflix leased 99,250 square feet from Hudson at Sunset Bronson Studios for production work.
These deals indicate the growing importance of producing original content for Netflix. Netflix believes that original content targeted at various user groups will drive up viewing hours, resulting in more subscriber events. The company intends to produce 1,000 hours of original programming in 2017.
Netflix expects to spend ~$5 billion on content acquisition in 2016 and $6 billion on content in 2017. Currently, 10% of its content spending is on original content. The company would like to raise that amount to 50%.