Market Rewards Rental, Netflix Execs Cash In20 Mar, 2008 By: Erik Gruenwedel
Citing “a material improvement” in the competitive landscape for DVD rental, New York investment firm Cantor Fitzgerald & Co. March 20 upgraded from “hold” to “buy” the outlook for online rental pioneer Netflix Inc.
Shares of Los Gatos, Calif.-based Netflix have nearly doubled in the past six months from the $18 per share range.
Analyst Derek Brown, in a research note, said Netflix stood to gain due to Hollywood's tepid approach, and consumer's indifferent response, to digital delivery.
He also said the Netflix business model excelled versus rival Blockbuster Inc. due to superior scale, data usage and logistical experience.
Nonetheless, Blockbuster stock closed March 20 up 5 cents.
Brown said this presented a significant window of opportunity for Netflix, which he expects to last longer than investors realize.
Netflix CFO Barry McCarthy didn't hesitate, selling 5,000 shares of common stock in a pre-arranged trading plan for $35 each.
Earlier in the week, McCarthy's boss, co-founder and CEO Reed Hastings, upped the ante to 10,000 shares sold after acquiring 2,500 shares for $1.50 each in a pre-arranged deal.