Wow! The market has determined that Netflix is worth $1 billion more this morning than 48 hours ago, compared to $238 million in profits over the past 12 1/2 years. How does the market calculate these things? I'd like to know.
didn't read anything this morning, but I'll look.
Argentina and Brazil share a common border but not a lot else, different culture, different stage of economic development, different language, different political classes, different levels of transparency. They should enter Mexico first, that would be the smart move, Brazil is far too complicated from a cultural, regulatory and fiscal standpoint to bite your teet on internationally. Mexico is more like the US and Canada, very Pro-American, too, where Brazil is more nationalistic, especially after the recent economic boom. Netflix really can't borrow to fund operations in either Brazil or Argentina, it's cost prohibitive from an IOF and withholding standpoint, especially with tght margins and hedging the currencies (can't hedge the Argentine peso, for all intents and purposes).
Argentina is curious, I know a lot more of there than Brazil since I lived there for 6 years. The head of the Congress a decade ago - Alberto Pierri - is the owner of the largest cable company (actually his wife Olga is the Owner and President - like all Argentine companies the wife has all the pretend responsibility while having no personal assets in her name for liability) and is very corrupt, good luck getting any rights to any films or TV shows there. he'll either have a DGI (IRS) inspection on Netflix on a daily basis, have the electricity cut to Netflix building or have any unions affected terrorize, kidnap and harass Netflix executives. If Netflix is lucky enough to survive him, the amount of bribes and kickbacks they will have to pay there to the film distributors will be very cost prohibitive, and illegal under US Law. They better hope the US Embassy will be on good terms with the next President, if they want to succeed. They basically have no chance there, even if they do, there is very little way to effectively repatriate their profits. Brazil may have plenty of similarities. Venezuela, Ecuador, Paraguay and Bolivia are no go zones for investors. Chile is marginal due to size, Uruguay is 25% of the size of Chile. That basically leaves Colombia. So, Colombia and Mexico are ok, Brazil will be a struggle and nowhere else has any potential whatsoever.
If they get a Pan Latin American strategy, bet the farm on puts, they'll be dead within 2 years. or in the single digits.
Like I said, there is a small window of oppty to short NFLX and make money.
Good luck to you..!
BTW, did you read some of those posters about Brazil this morning? Something must be up.... IF NFLX conquers Brazil, then they have Argentina, Mexico, and Lat Am all wrapped up. Just find a good partner. The rest is history.
markets don't wake up in the morning targeting a company's enterprise value, multiple etc. Sybil gave a great expose of how the markets are run up/down by institutions bent on squeezing or bashing a company--all predicated on factors with a technical bent. Mo stocks early in their cycle almost never focus on more traditional fundamentals and if they do a pumper will always discuss new paradigms/models to sound clever or push the inevitable down the road. in NFLX's case, I don't think anyone disagrees that their biz model is flawed and unsustainable and its only a matter of time before this comes crashing down but timing is everything--2 weeks, 2 months or 2 years?