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Netflix Inc. (NFLX) added 1.74 million streaming subscribers in the U.S. during the first quarter but failed to satisfy investors' concerns about the video delivery company's ability to grow its business.

Netflix Inc won back Wall Street's affections on Thursday after adding more U.S. subscribers than expected in the fourth quarter, a rebound that prompted analyst upgrades and the company's biggest one-day stock jump in two years. The Los Gatos, California-based company's shares soared 23.5 percent to $117.40 in afternoon trading. Shares had dropped to a year's low of $62.37 on November 30.

Our current estimates imply that Netflix may have more or less maintained domestic streaming subscribers in Q4 of 2011 and may have grown internationally. Our price estimate for Netflix stands at $126, implying a premium of more than 30% to the market price.

Netflix’s stock rose by about 10% last week before falling lower, driven by rumors about potential acquisition by Verizon. While reports indicated that Verizon may be seriously considering the acquisition at around $4.6 billion, the company denied that it has organized any talks or meetings with Netflix. We think that Netflix will not sell itself at the implied price per share that results from $4.6 billion bid. For details see Verizon Would Have a Tough Time Acquiring Netflix which talks about why an acquisition at stated value is unlikely, be it by Verizon or another potential suitor Amazon. In general, several analysts including Trefis analysts see any acquisition as highly unlikely.

Verizon may not have had much bargaining power with its currently minimal streaming subscriber base, but a partnership will help Verizon leverage Redbox's established relationship with content providers to get more favorable deals. This could lead to less of an impact on gross margins than had it decided to go alone.

Wedbush analyst Michael Pachter says that increased content costs, a precipitous decline in subscribers, and a 'growth at all cost' mentality will continue to hurt Netflix in the future. Read this blog post by Don Reisinger on The Digital Home.

Despite recent troubles, Netflix is a major force on the Internet, accounting for 32.7% of peak U.S. downstream traffic, according to a new report.

Netflix is abandoning its widely panned decision to separate its DVD-by-mail and Internet streaming services because it would make them more difficult to use.

Now playing: Movies at Walmart.com. The world's largest retailer on Tuesday started streaming many movies the same day they come out on DVD, in a second bid for a share of popular movie rental and streaming website Netflix Inc.'s business and just two weeks after Netflix announced new price increases.

Netflix on Monday officially declared its future is the Internet, saying the DVD market has “peaked.” But experts wonder if the online streaming giant — now with 25 million subscribers in the second quarter — and other Web firms face a looming threat to their businesses. They aren’t talking about competitors such as Hulu, HBO Go and Amazon Prime — the threats outlined by Netflix said in its earnings report. Experts are pointing to broadband data caps.