iCloud will simply limit NFLX growth potential. It will be premium purchased content. MSFT will be a threat as a virtual cable channel (much more direct competition) and Google will eat its lunch longer term with free to the consumer ad supported long tail/syndicated content.
The days of rapid growth for NFLX are over. Canada is already showing the international growth isn't profitable. Licensing costs are going up and customer acquisition/retention costs will grow with a more crowded landscape. That, coupled with the more limited upside because of all the new niche entrants means NFLX will suffer massive multiple compression over the next 2 years and has almost no upside and lots of downside...
I don't see a 20-40 point drop. Look, the market looks forward. Apple and Google have been soft in anticipation of the summer selloff and weakening economy despite two record quarters and accelerating earning.
The institions who hold this need to start trimming their positions because once the earnings are out, the bubble will have to burst. Insitutions with smaller positions will sell out. The big boys will be left holding the bag with all of shares of a company without meaningful earnings growth, $1B+ in debt and with a bunch of innovative strong competitors.
Yes, the real decline will be gradual and take place over 12-24 months, but the air is coming out now. They'll squeeze on the way down just like the way up, but the fundamentals are OVERWHELMINGLY bad for this stock.