The daily pops are nothing short of pure agony for anyone who's got 1/2 a brain and understands the fundamentals of the business. I have no current position, but the market is on crack. AMZN, NFLX, CMG... to name a few are at 52 week highs. OPEN did the same thing when it annonced heading to Europe for market growth. It's down over 30% from its high. I'm a patient guy, so I'll wait my turn.
No market trend has ever surpassed 4 years of positive gains. Every company eventually competes in a mature environment unless you're constantly re-inventing yourself, and that is something NFLX is not doing.
Two other continents left; Europe and China, both of which love to put up trade barriers in order to allow local companies to compete. Today's move was a desperation yelp for saying we're still growing.
I am indeed learning a thing or two from this market. One thing I've learned is even if you don't believe in a momentum play, don't stand in front of it.
It's not that I don't believe in NFLX's product (although I watch my movies for free elsewhere), it's the valuation NFLX is given why it's difficult to buy into it. It's cash poor, pays no dividend and is held up by mere trading tricks of supply and demand (shorts supply the artificial demand). In any case, to expand further requires cash. It will be interesting how the company raises money over the course of the next year to continue operations and expand.
Patience... In a bubble, speculators look brilliant until they look like the morons that they are.
A lot of short interest has covered over the past two weeks. It will come on again and with a vengeance. Right now, they are just driving the puts out of the money with the short squeeze covering. Look for all of these momo stocks to tank in August (whether or not we raise the debt ceiling).