In a break from GAAP accounting, NFLX is no longer passing all of its content costs thru the income statement. Instead they are pretending that content costs are an investment that builds brand loyalty. That is if there was no content you would gladly pay your monthly fee just to say you are part of NFLX. If they get real aggressive with this they could produce an extra $1.5 billion of net income net income in 2013. Of course they will have to explain why they are so profitable while needing to issue $2 billion of new debt and/or equity to pay for content that was used in prior years.
NFLX has issues and playing with the accounting is a clear sign to run, not walk away from this turd.
Don't worry Netflix will not be reporting earnings of $3 a share next year. They will be using the money to further strengthen their position as the low cost provider. Of course this will result even bigger loses for the competition, at least for the ones still remaining in the game. It will be after Netflix have sent the competition packing that you will see the big profits. With no competition around they will be able to increase prices.
NFLX will trade over $300 this year. The shorts better cover on this one soon. NFLX is gaining subscriber momentum, and taking market share. They have twice the revenues AND earning of LNKD but they both have the same price. NFLX will explode soon....