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Here's Why Netflix, Inc. (NFLX) Stock Jumped Today

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Shares of Netflix, Inc. (NFLX - Free Report) popped to a record high on Tuesday morning after reports surfaced that the streaming giant would soon enter the Chinese market.

Variety reported that Netflix landed its first Chinese licensing deal with fellow streaming platform iQIYI. After the news, Netflix’s stock price climbed up 5.93% to $152.37 per share in early afternoon trading on Tuesday. Netflix is currently a Zacks Rank #3 (Hold).

Details of the new Netflix deal are not currently available, but the hope is that Netflix will distribute some of its original programming in China via the Chinese streaming provider iQiyi.com—Baidu Inc. (BIDU - Free Report) controls iQiyi.

Netflix’s has previously tried to make its way into China, but the company has been deterred by China’s strict regulations on both film and television. The company’s iQiyi deal will follow Chinese censorship laws.

Chinese censorship laws currently require entire series to be approved before a show can be carried by any platform. It is unclear how iQIYI and Netflix will work out streaming debuts, or how Netflix’s content that is available in other countries will be trimmed or cut if it is deemed necessary.

By the end of 2016, Netflix offered its streaming services in 130 countries. China was the last major market for Netflix to enter.

Netflix’s stock dropped slightly on weak user growth after it released it first quarter earnings report on April 17. The first step into the Chinese market could prove to be the jolt that Netflix needed.

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