Netflix stock tops S&P 500 in May, up 30%

The old adage 'sell in May and go away' warns investors to sell their stocks and buy them back in Novemberto sidestep the weakest trading period of the year.

That strategy did not apply to Netflix.

The video-streaming company's stock is up nearly 30 per cent this month, making it the best performer on the S&P 500 Index. The stock is trading at about 415 dollars a share versus 322 dollars a share on April 30.

The overall S&P 500 index is up less than two per cent.

Why the positive sentiment?

Netflixjust raisedits monthly subscription cost by $1 for new members in Canada and elsewhere. But unlike in2011, when the company unexpectedly boosted prices by as much as 60 per cent and lost 800,000 subscribers, the company didn't suffer a customer exodus. This time, users were forewarned of an increase andthe change in ratefrom $7.99 to $8.99was significantly less dramatic. The change doesn't affect existing customers for anothertwo years.

Also, with subscriber numbers plateauing in North America, Netflix has announced plans to enter six European countries this year Germany, France, Austria, Switzerland and Belgiumwhich will be its biggest expansionsince arriving in Europe three years ago. The company already has 48 million customers in more than 40 countries.

Concerns going forward

Tapping into new European markets won't be easy, or cheap. Netflix's launch in 2007 and subsequent takeoff hasspurred new players to jump into the market, especially in countries where Netflix was absent. Netflix will have to compete withCanal Play Infinity fromVivendi's Canal Plus in France andAmazon.com's Prime Instant Video in Germany.

Netflix will also come up against new rules, particularly in France where Netflix cannot use films in its serviceuntil three years after they open nationally in theatres.

In an April letter to shareholders, Netflix said the expansion will keep the company's international division in the red for this year, but it expects those markets to eventually surpass the U.S.