NFLX outbids Starz. Doe NFLX have that kind of money to shell out? Stock goes up???
Or is this a trap?? Do Wall St funds know better? Do they know that when you outbid someone, you are paying top $$$ out of your own pocket. Do you have revenue from $7.99 subscription to pay DIS top $$$?? I think whil retail guys are screaming $100 next stop, Wall St funds are gonna thank their lucky stars after this the rally and now short at the very very TOP and ride it down all the way to oops....no bottom maybe???
I think today is an overreaction and the weak shorts are set up for a squeeze after yesterday's dump. If you read the details of the deal, the Disney agreement on movies does not start until 2016. So if you think that you're going to get Disney movies at the same time when the DVD is out, forget NFLX. It is faster to go Pay per view. The street is also guessing that NFLX is paying $30M per movie over XX years to Disney since they paid Spielberg $20M in the Dreamworks deal. Even if you amortize over 10 years, that is $3M per movie to Disney. How many subscriptions do they need to add in order to break even ??
Also, the Dreamworks deal start on 2013 so again you can't watch the new releases until next year. Anyone that can read will smell today's fake head rally.
NFLX is no HBO. They don't have the deep pockets and they are blowing smoke hoping to retain current customers. With the increasing competitive streaming market and some mega competitors like AMZN and APPL, let alone 'pay per view' offered by cable operators, there is no way that NFLX can survive such a market. Their business model is not proprietary anymore. NFLX is like GRPN in the video rental business. With a negative PE, I wonder how they can stay around with a $4.8B market cap.