Netflix Shares Closed Above $200 for First Time Ever

Company's stock is up 274% this year as FCC investigates dispute between Comcast and Netflix's content-delivery network provider, Level 3.

Shares of Netflix closed above $200 for the first time since the company went public eight years ago.

Netflix shares rose 3.5% Tuesday to finish at $205.90, up from a lowly $3 a share in 2002 when investors doubted that the company could survive challenges from Wal-mart and others that were eyeing its innovative business model of mailing DVDs to subscribers.

Netflix stock is up 274% this year.

At Tuesday's closing price, Netflix had a market capitalization of nearly $11 billion, almost $2 billion more than Dish Network and just shy of the market cap of CBS.

Meanwhile, Netflix has found itself in the midst of a dispute between Comcast and Level 3 Communications, which is the content-delivery network provider for Netflix's streaming video business.

Comcast has demanded that Level 3 pay a fee for the growing amount of video traffic the latter is moving to Comcast's customers. Level 3 has complained but said it will pay.

The FCC is looking into the matter.

Netflix CEO Reed Hastings boasted recently that the company is providing more content via streaming than it is through DVDs, and it recently announced a streaming-only plan for $7.99 a month.

The focus on streaming seems to favor Netflix, judging by its surging stock price, but some analysts worry about the effect it is having on the businesses of those who own the content.

On Monday, Richard Greenfield of the Wall Street firm BTIG noted that all eight seasons of the TV show 24 will retail for $350 on DVD. Why should Netflix users buy the DVD set when they can stream every episode of the first seven seasons and get the final season on DVD, all included in their monthly fee?

"With Netflix now available on virtually any device imaginable both in the home and on the go, offering Netflix the ability to stream high-quality TV content as part of its $7.99 a month subscription plan is significantly devaluing the content," Greenfield wrote.

comments powered by Disqus