In fact, looking through the commentary on Icahn's interest in Netflix, it was hard to find anyone who had anything positive to say about it.
Which brings us to another point. The market is short NFLX in a big way.
As of Oct. 15, 2012, there were 16.2 million shares of NFLX short, equal to 29.1% of shares outstanding. That's more than two days of trading at current elevated volume.
In addition, there are another 26.7 million shares worth of out-of-the-money put options with strike prices between $60 and $77.50.
There is only one way to close a short position in a stock-you have to buy it back. What we have here is an Icahn-inspired short squeeze in Netflix. NFLX shorts are scrambling to cover as quickly as possible, putting more buying pressure on the Netflix share price.
How far can the short squeeze run?
It looks like NFLX will have to take a breather around the 200-day simple moving average, which currently stands at $82.35. With Icahn in the game, NFLX could break above the 200-day simple moving average but we are likely to see consolidation around that level first, as the current round of short covering subsides.
Since this was written, Netflix short interest is now over 17 million shares. "...looking through the commentary on Icahn's interest in Netflix, it was hard to find anyone who had anything positive to say about it." And look at how active the shorts are on this board trying to control the story. THEY ARE DESPERATE TO THE EXTREME. Imagine Yankee Stadium filled with shorts, their bowels ready to explode and only one bathroom for relief. That's the kind of panic which will happen if anyone makes a bid for Netflix because if we have one bid, we will have many bids. The Sandvine reports makes it clear that there is no number two to Netflix since Hulu and Amazon Prime are 1/18th of Netty's streaming volume.