Netflix is reportedly talking to cable companies. Does it have a good opportunity ahead of it or are the charts waving a giant red flag?
Netflix is reportedly in talks with several cable companies about offering streaming video service on cable boxes.
According to published reports, two of the cable companies include Suddenlink and Comcast (CNBC, producer of "Talking Numbers" is owned by Comcast). While such a deal would be the first of its kind for Netflix in the United States, it already has such a deal with Virgin Media in the UK.
Netflix is sometimes seen as a direct competitor to cable operators. After all, the service allows consumers and not the cable companies to dictate programs. However, the two may have a quite a mutually beneficial reason to work together – Netflix requires the kind of broadband capacity cable companies provide. Netflix currently accounts for 32.3% of all nightly downstream Internet traffic in North America.
Netflix has had a fantastic year compared to other media companies. While the Powershares Dynamic Media ETF (the PBS) is up an impressive 41% this year, Netflix is up an astounding 247%.
But where is Netflix headed next?
On CNBC's Street Sign's Talking Numbers segment, two analysts take a look at Netflix. On the fundamentals is Tuna Amobi, Senior Media and Entertainment Equity Analyst with Standard & Poors. Amobi believes that this could be a great deal for Netflix (though maybe not so much for cable companies) depending on what ends up being agreed to, be it revenue splits or customer data. "The devil is going to be in the details," cautions Amobi.
On the technicals, Carter Worth, Chief Market Technician at Oppenheimer, warns that Netflix's current chart looks eerily similar to its bull run from January 2010 to July 2011. In that 18-month period, Netflix soared 425%. But, the stocks collapse in the second half of 2011 saw anyone who bought shares before the July 4th holiday lose 75% of their money by Christmas.
So, does Netflix have a good opportunity ahead of it or are the charts waving a giant red flag?
Watch the video above to see the rest of the analysis by Amobi and Worth on Netflix.
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