Netflix is up about 9.8% to around $73.10 in early trading today — continuing a hot streak that has resulted in a 33.7% leap for the home video company since the beginning of October. The latest explosion appears to have been ignited by Morgan Stanley’s Scott Devitt who upgraded his recommendation this morning to “overweight” from “equal-weight” with a target price of $85. The reason: He no longer believes that Amazon will “continue to invest substantial resources into building a tiered streaming offering” that competes with Netflix. Instead “we are seeing a much more tactical approach to content acquisition [by Amazon], and we believe the company is focusing more on acquiring boutique film and serialized television content. Additionally, Netflix is also deploying resources into original programming.” Indeed, Devitt says that when original series including House Of Cards and Arrested Development debut next year “we could potentially see a renewed interest” in Netflix. His upgrade follows last week’s strong endorsements of Netflix shares by Citi’s Mark Mahaney and hedge fund investor Whitney Tilson.


Amazon’s on demand service is small potatoes. They’re really going to invest in servers for a tiered service? Stick to e-retailing, Amazon, it’s what you do best.
To be fair, Netflix actually uses Amazon servers, through their server program from small business, but I agree that Amazon will not be able to compete with Netflix, kind of funny considering Amazon could of owned Netflix, but they offered the ridiculously sly small 12 million dollars.