In the perception of the mass public the stock market is remotely related to every day life and is merely a place were people make and lose their savings. Sadly they’re wrong; stocks are not abstract commodities they correspond to an ownership slice in a cooperation and were the corporation goes the stock usually follows it.
A major example of this link is Netflix; the stock recently rallied to an all time high of 133.27 USD. The appreciation came as a result of an increase in Netflix’s earnings due to higher demand for its streaming services. In simple terms, while we “Netflix and chill” they cashed in and investors demanded a share of the pie leading for the price of the stock to increase (simply fine 101).
As we as consumers demand more streaming services expect the stock to appreciate more, but that is only one leg of the equation. Netflix does have a monopoly over market, competition is fierce and is rising from Google’s Comcast to Amazon’s Fire TV the market is full of cheaper alternatives but not all are equal. Netflix does have an upper hand with regards to content though and with contracts with most of the major producers it is expected to keep it.
The company’s Q4 earnings statement will be released on January 19, 2015 and if it exceeds expectations expect the stock to rally higher.