Unless there is a miraculous announcement about NFLX obtaining content for free or that they are now available on Mars and Jupiter, NFLX will nose-dive to reality soon. The momo abd HFT traders who're riding it high now will just as quickly ride it down. At current levels, how does the risk vs reward make sense for the longs? Any intelligent responses are welcome. Stupid responses underscore the quality of those who hold this investment at these levels.
So let's do some quick analysis on NFLX numbers to see how the valuation pans out:
Rev growth: 4.4% Q-o-Q and 12.6% Y-o-Y
Gross Margin "expansion": 6.3% Q-o-Q and MINUS 15.56 Y-o-Y (that's margin contraction!)
Current Earnings/sh: 80 cents per share
Trailing PE (last 4 Qs): 392
Forward PE: 94
Book Value/sh: 18.76
Current Subscribers: 38 M
Subscriber growth: 26%
Cost of content: Mostly capitalized, hence the jump of $460M in current assets Y-o-Y!!
Increase in debt: Y-o-Y: $346M
All these numbers are from the NFLX filings. This is the truth, now do you really want to invest in this company?
I STILL have absolutely no idea who is buying here. I mean, ALL the recent indicators are not good...insider sells, Icahn being LESS bullish, lack of clarity on costs, downgrades, a stock with a PE out of control with all time highs....NOTHING makes sense here, NOTHING. The funny thing is how is drops like a rock on big volume then when the selling subsides, it jumps $2 on about 1/10th of the volume that took it down. No one wants it at 307, but then suddenly everyone wants it at 313??? Something smells fishy, and it ain't the pier.
i had a put spread going into this week and caught the down 20 in 15 min monday. closed it out right away in anticipation of them driving right back up but this has been incredible.....next time they wont hit the breaks. tomorrow at the close i will set up a put spread and hopefully do it again. i started building it today and late yesterday. i thought there would be some rebalancing and the markets were weak earlier this week, but no no selling pressure with NFLX at all...just keeps going up. The rip down will be so fast most people will not catch it...