The Bankruptcy of NFLX (Netflix)

Quote from Pekelo:

Optionplay:

http://seekingalpha.com/article/320545-now-is-the-time-to-buy-netflix-s-volatility?source=yahoo

Also check out the guy's description of the earnings play strategy:

http://seekingalpha.com/article/310...loiting-earnings-associated-rising-volatility
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Thanks A good investor is one who pulled the trigger at the right time.

Pekelo you are a great trader and I am looking forward to your posts. What else you like in this crazy market?

I think personally its out too fast.
 
Quote from myoffices:

Thanks A good investor is one who pulled the trigger at the right time.

Pekelo you are a great trader and I am looking forward to your posts. What else you like in this crazy market?

I think personally its out too fast.
More...

"I think personally its out too fast."
no offense and perhaps not the case but your comment is the one people use when they have missed the bottom by a very large amount.


January 19, 2012
NFLX
" Class-action suits or not, Netflix (NFLX +5.7%) continues to rally ahead of next Wednesday's Q4 report, thanks to optimism about stabilizing subscriber levels and the company's U.K./Ireland launch. Shares are now up 50% YTD, and up 67% from their Nov. 30 low. 18.4% of Netflix's float was shorted as of Dec. 30; it's quite likely that figure is now lower."
 
The waiting is finally over, earnings report this afternoon after the close.

Funny thing is that nobody knows how to account for 2011:

"There is some confusion within the brokerage bunch when it comes to Netflix’s full-year figures, with estimates ranging from a loss of 66 cents per share to a profit of 96 cents per share. The average comes in at a loss of 2 cents per share.

Overall, analysts are largely bearish when it comes to Netflix. According to data from Thomson/First Call, only six of the 35 brokerage firms following NFLX rate the shares a Buy, compared to 19 Holds and 10 outright Sell ratings. What’s more, the average 12-month price target rests at $80 – a discount of nearly 16% to the stock’s close at $92.67 on Tuesday."
 
Here comes the short squeeze on the stock may even see 120 tomorrow. Im still skeptical here. Pulling the trigger on 1/2 the position if it hits 120. Then let the rest ride. Its 150 or 50 by year end. Its only time will tell. What a trade. DVDs are going the way of the dinosaur. Stopped playing the Games on the Wii and its a Netflix machine now.
 
There are only two staples that I respect and fear in the market and VectorVest is one of them. Barrons is another. They just put out a buy signal on Vector Vest and I amsure the subscribers will be eating it up.

Plus there is a new codec for streaming out that may be a game changer coming around soon.
 
How high is high. Blockbuster is always lurking on the back ground.

Its time to pull the trade soon @ 140- or not?. Invest in (CSTR) Coinstar here? at 57 Reed Hastings is not focused on the competition and with the new APPLE TV available and so many barriers to entry for movies may kill it long term. I saw something from YOUTUBE which may be the NETFLIX KIller.
Over confidence is a killer.

I think the valuation is too strong too quick here.
 
There are 85,287,100 broadband users in the U.S.

See http://www.internetworldstats.com/am/us.htm

Netflix has 24.4 million paid subscribers. See http://www.usatoday.com/tech/news/story/2012-01-25/netflix-earnings-subscribers/52792788/1

Given this level of market penetration, I think that Netflix cannot be considered a company with incredible growth prospects. Sure, there might be some international growth, but it is more likely to face increased competition than it is to extend its market penetration.


In the last quarter, it made $40.7 million in profit. That is $1.67 per subscriber. If we just annualize that figure, Netflix would have $164 million in profit. The market cap of Netflix is $6.82 billion. The price to earnings multiple therefore is about 41.5 times earnings.

Netflix seems priced for growth. It would have to nearly quadruple its profit or more to be comparable to the S&P P/E ratio. Where can this burst of profitability come from?

What is the bull case for Netflix?
 
Quote from roreilly:

There are 85,287,100 broadband users in the U.S.

See http://www.internetworldstats.com/am/us.htm

Netflix has 24.4 million paid subscribers. See http://www.usatoday.com/tech/news/story/2012-01-25/netflix-earnings-subscribers/52792788/1

Given this level of market penetration, I think that Netflix cannot be considered a company with incredible growth prospects. Sure, there might be some international growth, but it is more likely to face increased competition than it is to extend its market penetration.


In the last quarter, it made $40.7 million in profit. That is $1.67 per subscriber. If we just annualize that figure, Netflix would have $164 million in profit. The market cap of Netflix is $6.82 billion. The price to earnings multiple therefore is about 41.5 times earnings.

Netflix seems priced for growth. It would have to nearly quadruple its profit or more to be comparable to the S&P P/E ratio. Where can this burst of profitability come from?

What is the bull case for Netflix?
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I read a report a few months ago that for NFLX to break even (in cash flow) they have to increase their revenues by 30% a year for the next five years. This will offset the growing cost of content.

Of course, price increases don't work. They tried that. So it comes down to increasing the userbase internationally and domestically in the midst of better positioned and better capitalized competitors.
 
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