I'm fairly new to the NFLX boards, but I recently made a bunch of money with a quick buy/sell from 12/20 to 12/21 where we saw that nice little pop. In at $177.39 and out at $185.61! I was thrilled!
But after having read a lot here on the boards, I'm not sure what to think about NFLX for 2011. High p/e... huge gains over the past couple of years... potentially easy to duplicate business model... all arguments I've been reading.
Anyway--I would love to hear some predictions for 2011 and why.
Q4 reports shows huge subscriber growth that is curiously not reflected in earnings or FCF. Margins contract slightly. Churn up slightly. Those concerns are no longer ignored, but cannot be addressed at the conference call due to the email question policy. Motley Fool publishes numerous articles about how NFLX is the next big thing. Cramer pumps incessantly. The stock still declines slowly.
Smoke and mirrors for the next few months hold the price in the $150 area. "Leaked" reports of international expansion and a new STARZ deal. A couple of announcements about lower-level content nobody cares about. The analysts ignore how they will pay for it. Q1 and Q2 reports continue to show subscriber growth that is not reflected in the EPS or FCF. Compressed margins and churn becoming more of a concern. Possible change in how they calculate churn.
Downhill from there. Cash becomes an issue and they take on new debt. CSTR and AMZN start competing services. STARZ drives a hard bargain and NFLX pays too much or loses them.
This stock is headed much lower. Netflix is not a business model that suports such a lofty share price. There are more competitors than you can shake a stick at in the streaming video market and they are about to unleash hell on Netflix!
Go check out AAPL or even Amazon. But wait untill after the sell off before buying anything else. Should be in the first week or two of January.
All in my humble opinion. Good Luck to you and never pass on a profit and never sit while watching losses get worse. Ten percent loss and get out. 10-15% gain... run or at least be ready to cash out.