Netflix (ticker: NFLX) stock is surging in early trading on Friday, as shares of the leading online video-streaming platform opened up 3.8 percent. The rally, which began in after-hours trading yesterday, heated up in the first hour of trading, with NFLX getting as high as $96.50 per share, good for a 5.5 percent gain.
The rationale behind the big move is somewhat murkier. According to Zacks, Rumors are swirling that Netflix may be gearing up for an expansion into China, which would clearly represent a huge market opportunity for the web-streaming giant. At the end of the first quarter Netflix had 77.7 million paid subscribers across the globe, with 45.7 million of those coming from the U.S. and the other 32 million spread out across the globe.
Many investors see international expansion as the main catalyst for NFLX stock going forward, and looking at the numbers it’s easy to see why. International paid subscribers grew more than twice as quickly as domestic subscribers in the first quarter, surging 65.8 percent from the previous year. Growth in the U.S. was slower, at 30.3 percent.
Still, an unexplained overnight surge in a hyper-growth stock like Netflix wouldn’t be complete without buyout rumors, and those are also floating around Wall Street today. Chatter that Walt Disney Co. (DIS) may be interested in buying out NFLX in an effort to buffer it against ESPN subscriber losses has been the “prevailing Netflix rumor recently,” according to a Zacks report.
Over the last decade, Disney CEO Bob Iger has overseen three of the most successful buyouts on all of Wall Street: First Disney bought Pixar for $7.4 billion in 2006, next was the $4 billion acquisition of Marvel Entertainment in 2009, and finally there was the 2012 purchase of LucasFilm for $4 billion.
Netflix’s current market capitalization is above $41 billion, nearly three times the combined price of Disney’s last three mega-buys.
While a potential entry into China would present censorship concerns, there may be a technical reason behind the big move in Netflix stock today. The 50-day moving average for NFLX is $93.62, and after closing at $91.48 on Thursday, shares have now shot above that mark, which many technical traders consider to be a short-term bullish indicator.
[Read: How to Invest in Streaming Media.]
[Read: 8 Stocks Joining Netflix in Sky-High Territory.]
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Netflix (NFLX) Stock Rockets Higher on Rumors, Technical Strength originally appeared on usnews.com
