Netflix, Inc. stock spiked right after the market opened on Wednesday morning, and the firm’s shares quickly jumped to more than $131 per share, the highest they’ve ever sold for. The move was against the general trend on the stock market on Wednesday. At time of writing shares in the media streaming firm were selling for $128.34, up 2.39 percent for the day so far.
Part of the rise in value of Netflix stock on Wednesday appears to be pure momentum. the firm’s shares have been heading broadly higher since the middle of November, and there doesn’t seem much that can get in the way of its massive growth. That doesn’t explain the boost seen today, however, though it seems that there’s little that can do so adequately.
Netflix (NFLX) stock jumps
On Monday a report emerged that added to the momentum of Netflix shares. The survey, which was carried out by ClearLeap, found that streaming services like that sold by Netflix were now installed in about as many US homes as cable TV. Nothing similar to that report was released on Wednesday, however, so we’re still guessing about the origin of the bump in Netflix stock.
What is very interesting is that Netflix stock is weathering more than one storm to head higher. The firm’s accounts are being hacked according to a recent security report, and some accounts appear to be up for sale on the dark web. It appears that today’s rise is all due to the momentum of recent days, and traders are just not expecting Netflix stock to head the other way any time soon, despite its hefty valuation
Wall Street spooked, Netflix flies
The Netflix, Inc. jump on Wednesday is very definitely against the grain of the general market. Federal Reserve chair Janet Yellen told the Economic Club of Washington that she was “looking forward” to a rate hike earlier in the day. The widely reported remark appeared to be the cause for a generally agitated market.
At time of writing the Dow Jones Industrial Average was down 0.69 percent to $17,764.85, while the S&P 500 was down 0.88 percent to $2,084.19. Netflix, in the traditional view, would be one of the firms most heavily hit by a rate rise. The firm doesn’t borrow all that much money, nor will it need to if its growing revenue streams are anything to go by, but the firm is in a sector that has been shaken.
Some traders think that the high value of the US stock market in recent years was driven by the policies of the Federal Reserve. Pushing the return on bonds down to very low levels left nowhere for traders to go but the stock market, and growth instruments like Netflix stock gained from the influx.
Now, however, the Fed is thinking about raising rates and some of that money may leak out of the market. So far in 2015 the stock market as a whole has been fairly flat, reflecting these concerns. Netflix stock has, however, charged higher through the year.
The firm is now valued at more than $50 billion, and it trades at a multiple of more than 300 times last year’s earnings. Given the counter-cyclical nature of the rise in Netflix stock, it’s a brave trader who would bet against it. 46,034,111 Netflix shares were being held short on November 13, however, meaning that a lot of people have already lost out in this particular run.