How was NFLX loss of subscribers not priced into the stock already?
The stock had already fallen 60% since its peak of $300 this year and then it falls another 35% today. It was predicted that they would lose a ton of subscribers from the Quickster debacle and that was true; however, the huge decrease in initial price should have more than accounted for that. Right?
How was that was trading at $300 6 months ago now only be worth $77 when they are expanding and have reneged on their stupid decision of spinning off the DVD business?
Some of it might have to do with fear. The leadership of that company hasn't really been showing the world they know what they are doing as of late.
I honestly think the stock will rise again once everything settles down and their leadership gets their shit together.
Agree. Also, they announced the expansion; shouldn't that have had some positive effect?
OP, Is somebody long NFLX?
I added a position yesterday before the earnings with good intentions. However, I also bought a few put options to cover my ass and hedge my bet. Worked out ok but I was just curious about this.
That expansion is going to be losing money until 2014(?). Who the fuck knows where the company is going to be by then?
Toldja.
Knife is FALLING and a lot of retail investors were involved.
Good time to go long NFLX now
Cramer disagrees. Also, it lacks catalysts and says it will incur loses for the next few quarters.
Yes because Cramer has made so many accurate call lmao
Catalysts for what? I'm looking at this from a fundamental value perspective: they're going to generate over $300mm FCF this year; they lost 800k subscribers because of the announcement, bringing their domestic subscribers count down to 23.8mm. Back-of-the-envelope calc says this is still way undervalued (and even guiding at 2.50/share @ $80, valuation is cut to a third compared to 4.00 guidance @ ~$280 or w/e it was)Incur losses why? NFLX is guiding for a loss because it's burning through that cash to expand internationally (higher margins, less shitty customers, higher growth potential)
Additionally, I think the bleeding is almost done... people are underestimating the convenience of Netflix. Looking at the customer polls, ~30-40% of those 24mm customers said they would contemplate unsubscribing, but only ~3% nixed the service by the end of this quarter... seems like consumer memory in the space is short. Who's close to rolling out a reasonable competitor service in the next year or so? Amazon? Apple?
Not saying that management hasn't royally FUCKED UP and destroyed customer goodwill or that I'm particularly confident in a long position. In fact, this may be just the catalyst needed for Amazon to roll its prime streaming service. In actuality, I pitched a short just a year ago @ ~210.
Just some food for thought.
http://ir.netflix.com/
http://ir.netflix.com/financials.cfm?CategoryID=282
http://idealab.talkingpointsmemo.com/2011/10/netflix-is-in-big-trouble-…
oh, cramer disagrees? must a really good time to buy then.
Netflix management has always done weird stuff like this. They weren't even a movie rental company before the tech bubble burst, at one point lacked the no late fees policy, had poor shipping procedures, and probably some others things I'm forgetting as well.
I'm sure they will fix this up and dominate the online streaming market since they seem to have a good idea as to where consumers are headed.
Expand your chart and you'll see the stock is up over 50% in 2 years and 204% over 5 years.
In reply to:
Interesting, I never knew they weren't a movie rental company at one time. I do know that their service was limited to the SF area for quite awhile (years?) before they finally expanded nationally. They took that time to iron out the details ("weird stuff") before allowing anyone outside of their defined area to sign up for the service. Even when they did finally go national the idea was considered too quirky to work, hence BlockBuster completely ignoring the idea and them for so long.
NFLX is toast. Why do you think that Bezos guy decided to take a haircut on each kindle fire sold? He's tapping more amazon users into their streaming service which will gain steam as they start to pick up more content. NFLX is a small fish in a big pond. Streaming video is the future and it's only a matter of time before major players with more spending power muscle the little guy out.
Short Selling...
http://www.thestreet.com/story/11288102/1/cramer-short-selling-doomed-n…
^^^^^^^^ SOUNDS LIKE SOME WISHY WASHY TALK TO ME
Hope they have some good D&O insurance.
Went long NFLX after doing some cash flow analysis. Cramer shorting it raises my conviction in my analysis by 100%.
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