I figure this is as a good a short as it gets. Massive off balance sheet debt, no earnings to speak of, out of control content costs and a customer base as loyal as a girl getting paid by the hour.
This ridiculous valuation will come to an abrupt end. Stay in and lose 90% of your money. The greater fools have left the building.
Sentiment: Strong Sell
Everyone thinks they know what this stock is going to do. I've heard this overvalued and too much competition talk for a year now, meanwhile the stock moves to over $200. I'm long this stock since last year when it was $77 and will stay long for the foreseeable future. No irrational decisions to sell based on a couple days of downtrend.
If you have followed NFLX for any amount of time...you know $300 may not be as far fetched as it sounds. When it wants to move...it moves. I never thought it would hit $200 myself. I am thinking as long as Icahn is holding, it will show strength on occasion. When Karl goes...look out. Just the way it is with the Flix. Makes for a dandy trader.
If i could, i would sell my house, and buy PUTS on NFLX now, so i can make millions, this garbage is astronomically over priced by people who don't understand business well. With hulu, yahoo, google, apple, samsung, and other media services coming online in the coming months and years, netflix won't be able to grow, they are simply a hard drive that streams out of date boring as hell movies for a massive rip off.
$20 a share, if.
When Hollywood raised prices and Netflix had to discontinue $10 DVD + streaming revenue growth slowed. The stock fell to a low of $53 in August '12 and revenue growth troughed at 8% in Q4'12. Revenue growth is now on the rise with 18% in Q1'13 and will continue to rise until it plateaus at 30-40% for many years until internet TV has replaced most of cable TV. In 8 years Netflix will cross $50 billion in annual revenue and have a MC of $70-$90 billion and its stock will be $1200-$1900.
NFLX is a bubble. No ifs, ands, or buts.
Unfortunately, it can stay a bubble longer than you can stay solvent.
BTW, NFLX is desperately in need of an infusion of new cash (Hastings has been burning cash like a drunken sailor lately); therefore, a secondary offering dilution announcement is imminent any day now. May the secondary dilution announcement will #$%$ this bubble.
More accurately a $214 stock that may be worth $20 eventually. Investex had it right paraphrasing Keynes: "Unfortunately, it (Netflix stock) can stay a bubble longer than you can remain solvent."
Shorting seems attractive because it is an account credit, the same leverage effect as using margin. The best you can expect is a $50 move, a return available with safer stocks.
The Netflix highway traveled from $53 to $240. That highway is littered with the dead bodies of shorts who said "this is as good as it gets." Options contracts banking on volatility is the smarter play with NFLX IMO.