Netflix, Inc. (NASDAQ:NFLX) had a tale of two sessions Tuesday as some positive deal news helped NFLX stock bounce back from a lower open on negative Wall Street commentary.
Shares were down 2% to 3% in early trading after Needham analysts slashed their rating to “Hold” from “Buy.”
After that came after a pretty nifty U-turn for shares, as mid-day trading was the mirror image of the first half of the session.
NFLX stock was up almost 3%, which is pretty impressive considering that the Dow Jones Industrial Average was off well more than 100 points at the same time.
The impetus for the reversal was a report broken by Recode, confirming that cable giant Comcast Corporation (NASDAQ:CMCSA) will allow customers to stream Netflix on their X1 set-top boxes. As Recode notes, this is “a very big deal.”
The market for NFLX stock clearly agreed.
Yet Another Point in NFLX’s Favor
Putting the Netflix app on CMCSA’s X1 set-top platform is momentous for a number of reasons. Per Recode:
“For Netflix, the addition of new subscribers would be a big benefit and it would also put them closer to a wider range of consumers … The move is an enormous step, given the long and sometimes contentious history between the two companies against a backdrop of increased consumer usage of internet-delivered video … The deal also lets the cable giant show regulators that it is more open to competitors and that its X1 box is a web video platform and not just an old-time cable box with a better user interface.”
The peace agreements have been a long time coming. More than once in the past, Netflix accused Comcast of violating ‘net neutrality’ principles by favoring its own web video service over those from competitors.
As we’ve noted recently, there are many reasons to be bullish on NFLX stock. This deal with Comcast just made the list a little bit longer.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
