External Factors

BUSI 530 Managerial Finance        

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Netflix Inc.

In a bull Market like the one we are experiencing, many external factors completely unrelated to finance can have a direct impact on a company’s stock price. A great example of such a Company is Netflix Inc (NFLX). A media sweetheart, Netflix inc. has been on a Bullish run since it dropped to its lowest point of $60/share in 2012 after announcing a price hike and service split up (Hartung, 2013).

Although its numbers indicate profitable growth due to a steady increase in subscribers, Netflix Inc price continues to swing back and forth following an irrational pattern. This could be credited vast popularity of the stock with the media and amongst analysts. From the opinionated analysts to volatile investors who are eager to turn a quick profit. Within minutes of a news conference or a positive/negative report, the Netflix price can swing hard, towards whichever way people are running. On the latest QR when Netflix Inc, announced that they were going to increase prices on their services in an effort to gather finance the funding for their original content (Kell, 2014). Many expected a collapse due to the news, despite an otherwise good quarter since in a similar scenario back in 2011, Netflix dropped a near 40% weeks following such an announcement (Hartung, 2013). This time however, Analysts remained positive, and Media put a positive twist on the story, and so the news were viewed as positive by these external factors, causing Netflix inc to regroup form a recent slump and continue to move forwards.

As far as internal factors, Executive officers often hold the key to a corporation’s success. This is done not only by finding success in the books, but by being able to please the stakeholders. In the case of Netflix, every time CEO Reed Hastings speaks, or reports on the company, the stakeholders are alert. He has earned the trust of his investors; this along with the deliverance...