Netflix Shares Surge After Subscribers Flock Back

Shares of entertainment provider Netflix surged nearly 26 percent Thursday after the company reported that subscribers are returning after corporate miscues drove them away last year.

Netflix shares closed at $116.01 up $20.97, or 22 percent, valuing the Los Gatos, Calif.-based DVD and streaming media provider at $6.4 billon.

Subscriber growth was better than expected, analyst Youssef Squali of Jefferies said. New subscribers rose 984,000 to 26.4 million, compared with expectations of only 788,000 new customers, as fewer left the company.

Netflix also said new forays into England and Ireland, and later into continental Europe, are starting to gain traction.

On Wednesday, Netflix reported its fourth-quarter net slipped 13 percent to $41 million, or 73 cents a share on revenue that rose 47 percent to $876 million, about $20 million more than analysts had expected.

Netflix lost customers in the second half of 2011 when it made two ill-timed moves. First, it announced hikes in fees for its DVD-by-mail service, from which it derives about 80 percent of income. Later, it announced plans to split in half, with Netflix becoming a streaming media service and the traditional company renamed as Qwikster.

The latter plan was scrapped after Netflix shares plunged, but most of the fee hikes remained in place.

Before the earnings announcement, there were indications of a recovery. On Jan. 4, Netflix reported subscribers had viewed more than two billion hours of streaming movies and TV in the fourth quarter.

Even with Thursday's surge, Netflix shares remain below their 52-week high of $304.79 set in July, just before the fees were hiked.