Is Netflix Now the Eighth Big Media Conglomerate?

Reed Hastings - 2016 The Venetian Las Vegas 2 - Getty - H 2018
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The company's market cap, now at $146 billion, is $8 billion shy of both Disney and Comcast.

Maybe it's time to consider Netflix the eighth big media conglomerate, as shares of the streaming company soared 9 percent on Tuesday causing its market cap to swell to $146 billion, just $8 billion shy of both Disney and Comcast.

Netflix's newly minted market cap, in fact, makes it a far more valuable company than any of the other five conglomerates: Time Warner ($76 billion); 21st Century Fox ($70 billion); Sony ($64 billion); CBS ($20 billion); and Viacom ($13 billion).

Netflix's big rise Tuesday puts the stock up 75 percent for the year and it comes one day after the company posted impressive subscriber growth, adding 7.41 million streaming customers in the first quarter while guidance was for 6.35 million. 

While Netflix's most prominent bear, Michael Pachter of Wedbush Securities, notes that Wall Street is severely overvaluing each Netflix subscriber at something north of $1,100, others aren't similarly concerned. On Tuesday, analyst Michael Graham at Cannacord Genuity, for example, added $70 to his target price on Netflix so that it now sits at $350. The stock closed $28.28 higher on Tuesday to $336.06.

Investors, though, were reacting to a slew of bullish news out of Netflix, not just its subscriber additions. Here are six highlights from the company's earnings report, a conference call with analysts and a letter to shareholders from CEO Reed Hastings, all of which happened after the closing bell on Monday and before the opening bell Tuesday:

1. The company said that while revenue for its legacy DVD-by-mail product was just $100 million in the first quarter, its streaming revenue surged a record 43 percent to $3.6 billion, and Hastings predicts nearly 44 percent growth in the current quarter.

2. Most of Netflix's growth is coming from outside of the U.S., as the company is already in 190 countries. The current quarter, in fact, should mark the first time in Netflix history that the majority of its revenue comes from international markets. As of the end of the first quarter, the company boasted 68.3 million subscribers outside the U.S. compared to 56.7 million stateside.

3. Ted Sarandos, the company's chief content officer, said Tuesday that 13 Reasons Why, the company's mystery series about a teenager who takes her own life, was probably the most-watched show in the entire world last year.

4. While Sarandos said that Netflix has no intention of diving into the news game to compete with CNN and the others, it is having success with topical interview shows, such as one that features David Letterman. More such shows are coming, perhaps one starring former President Barack Obama, he said.

5. Sarandos said Netflix released 33 films theatrically last year, all of them available for streaming the same day they hit theaters, and he sees these so-called day-and-date releases becoming "more and more accepted as part of the distribution norm."

6. Netflix certainly has a valid claim of being a major media conglomerate as opposed to just a wildly popular distribution platform, given that Hastings says it will spend up to $8 billion on content this year alone, much of it to create original programming. One of its newer successes is in reality programming, with shows like Queer Eye and Nailed it. "Our output in this area is now comparable to similarly-focused U.S. domestic cable networks," Hastings said in his letter to shareholders.