AVS Club Gold
Join Date: Jun 1999
Location: Jacksonville, FL
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To the contrary- More profits are usually put to work in the company first, salaries and bonuses second, and stock holder's last to none at all. Netflix has no dividend so the only way a shareholder can reap a return on his investment is to sell when the stock goes up. When you see the company declare a dividend or increase the dividend then you may make the claim that the increased profits benefit the share holder. If you see the executives and employees get bonuses and stock options, then and only then may you make the claim that the profits benefit the executives. With Netflix, the additional profits which has been miniscule, are used to maintain the licenses and improve the delivery via streaming technology.
What you have stated is you set a threshold level for your desired performance of the service and assume that until that is reached, the company is not investing profits back into the service. I think anyone who responsibly researches the facts will have to admit Netflix has spent most of it's revenue on the huge increase in costs of licensing content and increasing the backup of alternative streaming services.
The market spike in the stock market price of the Netflix stock, is mostly a result of Carl Ichan public statements and not a function of the profitability. The fact that he has become a heavy investor sparks others to ride along causing the stock to pop. When Carl is satisfied with his gain he will dump out and then the stock will fall off the cliff. None of this has anything to do with the fundamentals of the company.