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Netflix Ups Social Media Quotient

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Netflix (NFLX) is reportedly planning to include Facebook (FB) and Twitter as the social medium for sharing and declaring important company news. Other means of the company’s disclosures include the Netflix Blog and Netflix Tech Blog on the company’s website.

Recently, Netflix was acquitted by the Securities and Exchange Commission (“SEC”) in a Regulation Fair Disclosure or Reg FD case. Most importantly, the SEC also revised its disclosure rule, which will allow companies to make corporate announcements over the social media by providing relevant web addresses through notifications on their company websites and press releases. This change in rules comes after the SEC accepted the relevance and participation of the social media in corporate communications.

Notably, the new rule would strengthen Netflix’s social integration with Facebook. Previously, Netflix had decided to extend its social features to its U.S. subscribers. The streaming services provider announced new features that will enable U.S. subscribers to link their Netflix accounts to Facebook.

However, we believe that Netflix will not be the sole gainer from the newly-amended rule. Every other company will be in the race to utilize social media for their corporate communications.

We believe that more than anything else, Netflix’s superior content will be the ultimate deciding factor in the ongoing battle for online supremacy. Netflix’s new and exclusive content offerings to its subscribers are the company’s biggest USP, setting it apart from its closest peers, Hulu, HBO, Amazon (AMZN) as well as the newly-launched services from cable and media companies such as Comcast (CMCSK).

We believe that the improving paid subscriber base, international expansion, diversified content portfolio and a huge video library are the positives in the near term. Moreover, Netflix’s own content delivery network, Open Connect, connects its video library directly to Internet service providers, ensuring fast data transfer to enhance customer experience. This will further improve customer engagement going forward.

Currently, Netflix has a Zacks Rank #1 (Strong Buy).

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