Last night during Netflix’s (NFLX) triumphant post-earnings conference call," CEO Reed Hastings joked that HBO boss Richard Plepler’s HBO Go log-in password is “Netflix b*****.” It’s a stinging blow in light of published data showing Netflix passed HBO in total U.S. subscribers last year and is likely to extend the lead in 2014.
“I love what Reed Hastings is doing,” Hedgeye’s Keith McCullough tells me in the attached video. “The guy is taking people on with product innovation, consumer behavior patterns, and he’s got (about) 34 million streaming customers. This is a huge win and he’s not afraid to tell you about it.”
Though HBO disputes some of the data in last night’s call, Hastings said Netflix currently has 33 million U.S. members and hopes to double that amount in the relatively near future. If HBO isn’t choking on Netflix’s dust already they will be soon.
As McCullough points out, consumers are already migrating into the world of streaming content. While HBO and Showtime whine about monthly subscriber data Netflix is busy drilling into optimum pricing plans, development of new content and international expansion.
Wall Street is slowly coming around to the notion that Hastings might be more of a quirky visionary than the “monumentally stupid” executive who tried to spinoff his legacy DVD rental business into a freestanding division called Qwikster. Call it the Bezos Halo, in honor of Amazon (AMZN) genius Jeff Bezos who gets the benefit of the doubt on any strategic decision he makes regardless of the near-term impact on profits.
When a CEO gains that kind of clout with investors short-sellers start getting mulched. As McCullough puts it “the idea that '[Netflix] is expensive therefore it must go down,' is obviously an obsolete theory.”
He’s got only one recommendation for short-sellers watching Netflix rally more than 15% today in an otherwise horrible market: “Prayer.”