Netflix Inc. Chief Executive Officer Reed Hastings posted quarterly viewer data on Facebook, a day after announcing he’d take advantage of new rules that allow material information to be disclosed over social media.
“Over the last three months, you all watched over 4 billion hours on Netflix,” Hastings wrote yesterday on his page on Facebook Inc.’s social-media service.
Hastings is staking out a lead role in the use of social media to communicate with investors. Netflix said on April 10 it may use Facebook and Twitter for material announcements, permissible under guidelines issued last week by the U.S. Securities and Exchange Commission, which ended a probe into Hastings’ earlier Facebook posts on viewer usage.
“We encourage investors, the media, and others interested in our company to review the information we post on the U.S. social media channels,” Netflix said then in the April 10 regulatory filing.
Yesterday’s post by Hastings prompted a research note from BTIG LLC’s Rich Greenfield titled: “Is Netflix Now the Most Watched ‘Cable Network’ on Television? 87 Minutes Per Household Per Day.”
Netflix, the world’s largest online subscription video service, rose 4.2 percent yesterday, propelled by a separate note from Goldman, Sachs & Co. analysts, who raised their estimates for subscribers, revenue and profitability.
As of 2:21 p.m. in New York, Netflix was down 0.3 percent to $172.44. Before today’s trading, the shares had gained 87 percent this year.
“The content library is increasing the value of Netflix to subscribers that results in a larger addressable market and higher average revenue per user long term,” Goldman analysts led by Heath Terry said in the research note.
The analysts suggested Netflix could reap about 5 percent more revenue per subscriber in the U.S. and internationally starting in 2014, through price increases or by limiting simultaneous use of accounts.
A spokesman for Netflix declined to discuss pricing plans or to elaborate on the use of social media beyond the filing.
The new SEC guidelines clear companies to use Facebook and Twitter as long as investors are notified first.
Netflix, based in Los Gatos, California, said it will continue to make financial announcements on its website, in filings and in press releases. The company said it may also release material information on its Facebook and Twitter accounts, Hastings’s Facebook page or on the Netflix Blog and Netflix Tech Blog.
Hastings, 52, stirred controversy over SEC disclosure rules when he wrote in a July 3 post on Facebook that viewing on Netflix’s streaming service had “exceeded 1 billion hours for the first time” in June. He is a director at Facebook Inc.
In December, Netflix and Hastings received notices indicating the SEC staff planned to take enforcement action over the posting. The agency reversed its position this month.
“I wasn’t setting out to set an example, I was sharing something to these 200,000 people,” Hastings said in a January interview. “I’m not going to back down and say it’s inappropriate. I think it’s perfectly fine. Sometimes you’re just the example that triggers the debate.”
The new SEC rules have generated controversy. Business Wire, the unit of Warren Buffett’s Berkshire Hathaway Inc. that distributes press releases, said last week the SEC is hurting investors.
Guidance from the SEC allowing the use of social media to disclose financial information “poses a disservice to the investment community, threatening increased fragmentation of price-sensitive information,” Business Wire said in the April 4 statement. The stance also raises “privacy concerns as users are required to register to gain access to material news, security risks that may adversely affect market stability.”
The SEC hasn’t taken into account mechanics that make it difficult to filter Facebook or Twitter feeds to isolate posts by companies from others, said Michael Pachter, an analyst with Wedbush Securities in Los Angeles. That will require investors to monitor an avalanche of unrelated material in case Netflix releases news, he said.
“The SEC made a mistake,” said Pachter, who has an underperform rating on Netflix, the equivalent of a sell recommendation. “This is going to backfire on them, and a prudent company wouldn’t consider Facebook or Twitter as their only means of public dissemination of material information.”