Netflix's soaring stock price: How the company came roaring back

The movie-streaming service posts an unexpected profit for the fourth quarter

"Arrested Development"
(Image credit: Frederick M. Brown/Getty Images)

This week, Netflix posted an $8 million profit for the fourth quarter of 2012, largely due to better-than-expected subscriber growth for its movie-streaming service. The report defied analysts' projections that the company would post a loss, and Netflix's share price has since surged to about $140, up from its closing price of $103.26 on Wednesday.

Netflix's strong fourth quarter capped a volatile year that saw great upheaval in the industry. The growing popularity of movie-streaming has pitted Netflix against a host of competitors — including Amazon, HBO, and Verizon — that are snatching up content deals with various television and movie studios. The result has been that Netflix has to pay more and more for content, while having no access to popular shows and movies produced by studios that have taken their business elsewhere. Investors naturally assumed that Netflix's subscriber growth would slow and profits would fall.

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Ryu Spaeth

Ryu Spaeth is deputy editor at TheWeek.com. Follow him on Twitter.