SAN FRANCISCO (AP) — Netflix’s move to compete against traditional cable-TV channels with original programming is pulling in more subscribers to its Internet video service and winning back investors who doubted the company’s ability to cultivate distinctive entertainment.
The skepticism dissipated Monday with the release of Netflix’s financial results for the opening three months of the year.
The first-quarter numbers revealed that Netflix Inc. added 2 million U.S. subscribers from January through March — hitting the top end of the target set by the company’s management. The growth left Netflix with 29.2 million U.S. subscribers to an $8-per-month service that streams movie and TV shows to Internet-connected devices.
The company picked up another 1 million customers in the dozens of international markets where it streams video, leaving Netflix with 7.1 million streaming subscribers outside the U.S. Even though the international operations are still losing money, Netflix said it will expand into an unidentified European market during the second half of the year.
Netflix’s subscriber surge, coupled with signs that the company’s profit margins are widening, delighted investors. The company’s stock soared $42.48, or 24 percent, to $216.85 after the results came out. If the stock rallies similarly on Tuesday, it will mark the first time Netflix’s stock has topped $200 in 19 months.
The stock had plummeted to as low as $52.81 last August as part of a devastating descent that began in July 2011 when Netflix outraged its U.S. subscribers with pricing adjustments. The change resulted in a price increase of as much as 60 percent for customers who wanted dual access to Internet video and a DVD-by-mail option that includes the latest theatrical releases.