Netflix (NAS: NFLX) has been a roller-coaster stock for years. This week, the thrill ride continues, thanks to a warmly welcomed fourth-quarter report. The after-market jump reached as high as 19.6%. The stock hasn't seen prices like these since late October, before the last report. That time, Netflix lost 800,000 customers in a flurry of management miscalculations. This time, some of the refugees are coming back, just as CEO Reed Hastings has been saying all along.

In short, many investors thought that the growth story was over. It isn't.

As it turns out, the pricing change is forgiven and the Qwikster debacle largely forgotten. Netflix added 220,000 net streaming subscribers in the quarter in spite of heavy defections in October and November.

The streaming business is largely a fixed cost operation -- once you've paid up your content licenses, profitability becomes a pure quest for more paying members. Sending out digital copies of films and TV shows is close to free.

That's a stark contrast to the DVD mailing division, where every mailing adds postage costs and every disc you ship has to be purchased somewhere. That's why Netflix doesn't mind losing customers in this highly profitable operation. Margins stay steady even as the subscriber counts shrink.

Hastings is still not worried about competition from the digital offerings of Amazon.com or Hulu, because neither service can match Netflix's streaming content library. The earnings release didn't even mention erstwhile rival CoinStar and its Redbox vending machines. Instead, the largest threat comes from Time Warner and its HBO Go service.

Today, that option is held back by being tied to cable service contracts and limited support among consumer electronics devices. These things may change, making HBO look like the Joker to Netflix in the role of Batman. Keep an eye out for that possibility, fellow Netflix investors.

So that's where Netflix stands today. I told you to buy shares when they looked dramatically undervalued, and you're sitting on a 40% gain today if you took my advice. Not too shabby for a mere three months.

Will the Great Netflix Panic of 2011 go down in history as a game-changer or just another inconsequential speed bump? Add Netflix to your watchlist if you want to find out.

At the time this article was published Fool contributor Anders Bylund owns shares of Netflix but holds no other position in any of the companies mentioned. The Motley Fool owns shares of Amazon.com. Motley Fool newsletter services have recommended buying shares of Netflix, Amazon.com, and Coinstar. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

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