Why Are Netflix, Inc. (NFLX) Shares Soaring?

Furthermore, on Wednesday, USPS announced that it plans to eliminate Saturday mail service beginning in August. This will have a significant impact on Netflix’s DVD-by-mail service. Customers will not be able to exchange their DVDs as frequently, which could lower the value of the service. By contrast, Coinstar, Inc. (NASDAQ:CSTR)‘s Redbox kiosks are available on weekends, so Redbox may become more attractive as an alternative for customers who want DVDs rather than streaming video. Netflix expects a contribution profit of more than $100 million from the DVD business this quarter, so losing more DVD customers will have a clear negative impact on profitability.

In the short run, if Netflix, Inc. (NASDAQ:NFLX) is added to the Nasdaq-100, it could give the stock a boost. However, here at the Fool, we focus on the long game. Netflix faces many long-term challenges, and long-term performance will determine the stock’s trajectory over the next several years. The news this week suggests that Netflix’s struggles are not over just yet.

The article Why Are Netflix Shares Soaring? originally appeared on Fool.com and is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg is short shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix.

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