The shares of Netflix, Inc. (NASDAQ:NFLX) surged by more than 20 percent, to $84.12 per share around 3:00 PM EDT on Wednesday, due to reports that activist investor Carl Icahn acquired a 1o percent stake in the company. Netflix stock price closed at $79.17 per share, a gain of nearly 14 percent.
Based on the filing with the Securities and Exchange Commission (SEC), Icahn purchased more than 5.54 million shares of Netflix, Inc. (NASDAQ:NFLX) through Icahn Capital. The activist investor believes the shares of Netflix, Inc. (NASDAQ:NFLX) were undervalued, citing its dominance in the market, and its prospects for international growth.
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Last Friday, the stock value of Netflix, Inc. (NASDAQ:NFLX) went up, due to speculations that Microsoft Corporation (NASDAQ:MSFT) might be interested in acquiring Netflix. Netflix CEO Reed Hastings served as lead independent board member of Microsoft from 2007 until he decided to relinquish his seat earlier this month. Hastings gave up his board seat at Microsoft Corporation (NASDAQ:MSFT) to concentrate on Netflix and his work on education.
The stock value of Netflix, Inc. (NASDAQ:NFLX) started to decline after Hastings announced its decision to split the company’s DVD-by-mail and streaming-video services. The subscription rates for consumers who want both service offerings increased by almost 60 percent. Netflix’s subscribers dropped. Hastings decision pulled down Netflix stock from approximately $300 per share, to as low as $52.81 per share this year.
Last week, Hastings announced that the number of Netflix, Inc. (NASDAQ:NFLX) subscribers reached 30 million worldwide. The company’s TV and movie streaming service is now available in 51 countries globally. Netflix posted $905 million in revenue and 13 cents earnings per share during the third quarter. The company reduced its target number for video-streaming subscribers from 7 million to 5.4 million for 2012.
Carl Icahn is not the only investor who liked Netflix, Inc. (NASDAQ:NFLX). Hedge fund manager Whitney Tilson said that Netflix’ global prospects were encouraging, and it has a potential for strong global growth. According to him, Netflix has a light business model with the ability to tap large international markets.
Some people are speculating that Icahn might push changes in the management of Netflix, Inc. (NASDAQ:NFLX) to ensure growth and increase the value of shareholders.