Remember all that talk about Netflix (Nasdaq: NFLX) being the most beaten-down tech stock on the market? Well, the streaming video company just proved a lot of analysts wrong with its fourth-quarter earnings report.
Netflix’s quarterly earnings of 73 cents a share beat the consensus forecasts of 55 cents a share. Its $876 million in revenue also outpaced expectations of $857.4 million.
That was enough to send the stock soaring in after-hours trading. Shares are up more than 14% since the market closed, trading at $108 a share as of 5:11 p.m.
That’s a far cry from the $304.79 the stock was trading for in mid-July. But it’s also a vast improvement over its November 25 low point of $63.86.
The reason behind Netflix’s plummeting stock has been well documented. The company’s owner and founder, Reed Hastings, made a series of missteps in late 2011 that included a considerable price hike and a botched proposal to split of the company’s DVD-by-mail and movie-streaming services into two businesses. The very public flubs sent more than 800,000 subscribers running for the hills and generated enough bad publicity to send the stock tumbling nearly 80% in little more than four months.
But as our own Ian Wyatt noted, nothing about the company’s core business had changed. It was still the leader in the video rental business with 24 million subscribers – more than any other U.S. cable or satellite company. Plus, Netflix’s video streaming accounts for 29% of all domestic, peak-hour Internet traffic.
That was reason enough for Ian to make Netflix his top stock pick for 2012. As he wrote in late December, Ian believed Netflix was undervalued enough due to all the bad press that the stock had the potential to double in the next six to 12 months. At $108 a share and climbing, Netflix stock is up 57% in the last month.