1/24/13

While AAPL plunged about 12% after a lackluster release of its earnings report, NFLX came out one of the biggest winners in Q4 with a staggering 40% soar from the previous quarter at $146.

Facts:

  • Netflix reports 27 million subscribers over the US, up about 2 million from Q3.
  • Despite market skepticism suspecting loss, it came back strong with a $7.9mm in net profit this quarter -- 13 cents per share
  • Was at $300 in 2011, tanked to ~$100 after DVD business fiasco
  • Producing its own programs -- "Arrested Development" already a success; Two seasons of "House of Cards" budgeted at $100mm, set to premier soon
  • Carl Icahn's -- activist NFLX investor -- position doubled from $320mm to $700mm

Bits from CEO Reed Hastings:

"Our growth and our competitors' growth shows just how large the opportunity is for Internet TV, where people get to control their viewing experience,"

"The virtuous cycle for us is to gain more subscribers, get more content, gain more subscribers, get more content,"

Hadn't paid much attention to the stock, but I wonder why analysts were so bearish on NFLX? It's no secret that streaming service industry is growing explosively and Netflix is the clear leader. Maybe hulu+ is the only substitutable competitor, but, as far as I know, they don't directly compete on contents.. and I don't see Apple TV, Google Play, or Amazon streaming getting up there anytime soon. Tablet market expanding certainly helped. My only qualm about personally using Netflix is that sometimes they don't have some of the most classic movies of all time that should be obvious for some reason.

What do you guys think? Is the window still open on NFLX to jump in?

Comments (13)

1/24/13

Team Leader at J.T. Marlin

Disclaimer for the Kids: Any forward-looking statements are solely for informational purposes and cannot be taken as investment advice. Consult your moms before deciding where to invest.

1/24/13

I wish I was Carl Icahn

"I like Ackman," Mr. Icahn said. "I'll tell you why I like him. Anyone that makes me a quarter of a billion I like."

1/24/13

Gangnam Banker:
Hadn't paid much attention to the stock, but I wonder why analysts were so bearish on NFLX?

Because that's the guidance they were given by NFLX. This pop in the stock is pretty funny, because it amounts to management playing analysts for the fool. Trust me, it's only something you get to do once.

1/24/13

many equity analysts unfortunately stop at earnings. go down further you will see their cash position is sh*t.

1/24/13

Short NFLX in the coming days. This soar isn't sustainable. BEAR.

1/24/13

Agreed. I need to refresh myself on the details but still think this valuation might be a bit rich. NFLX definitely isn't going bust but I still think it unlikely that they will rule the roost of online streaming.

1/24/13

another fine example that the market can't find its own d!ck

How big is yours?

1/25/13

Heh, I wish I had money. I shorted Apple yesterday on a simulation for one of my classes and combined with some other trades made 25% return in the last two days.

In reply to cakepie
1/25/13

cakepie:
Heh, I wish I had money. I shorted Apple yesterday on a simulation for one of my classes and combined with some other trades made 25% return in the last two days.

If you were using real money I'm sure you would have done the same thing

In reply to mrktmaker
1/25/13

mrktmaker:
cakepie:
Heh, I wish I had money. I shorted Apple yesterday on a simulation for one of my classes and combined with some other trades made 25% return in the last two days.

If you were using real money I'm sure you would have done the same thing

Agreed.. Much harder to make the same bold bets with your own hard earned cash.

Ugh the FBI still quotes the Dow...
-Matt Levine

In reply to mrktmaker
1/25/13

mrktmaker:
cakepie:
Heh, I wish I had money. I shorted Apple yesterday on a simulation for one of my classes and combined with some other trades made 25% return in the last two days.

If you were using real money I'm sure you would have done the same thing


Lol, I would have shorted Apple anyways, diversification be damned. I hate that stock.
1/25/13
In reply to PuppyBackedSecurities
1/25/13

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