Most people here just see the excessive share price. However, keep in mind the Market Cap is only 13B. Next years EPS is projected to be over $6 per share. Its not the EPS today, its how quickly they are growing theri EPS. The revenue growth and earnings margins are accelerating and they have yet to break above 5% potential market share globally.
As an example, Apple has over 800 million shares. Comparing these 2 comapnies, if NFLX had that same number of shares, their share price would only be $16.50 or so. I cant imagine anyone would be screaming overpriced if that were the case. Dont let the share price deceive you. This same logic holds true with Priceline, Low float.
Note: I bought NFLX PUTS today around noon. I expect a short term drop in price but I am cautious as this thing is fully capable of popping or dropping $50 bucks one day.
With no competition this stock will be over 800 within 2-3 years. The only reason it isnt is because the barrier of entry is considered low and Facebook, Microsoft, google are all coming out with similiar services. I for one, think the projections for NFLX beyond 2012 are way too high as more competition eats their marketshare but time will tell.
Apple has a book value around 50 billion. Netflix is 250 million and that number is questionable. If Nflx traded at AApl's price to book it would be $25. And it will be when the game is over. Unfortunately, this slow move up is baiting more shorts to hop in everyday, especially with it's scripted strength during market weakness. There will be a washout of shorts over the next few months. Leave some powder dry.