Netflix was the darling fo the stock market with shares over $300 and rising daily just like Apple. But then late last year they upset everyone from customers to shareholders by trying to be smart and split the business in two so they could sell off the costly dvd delivery side. Share slid to $70. They apologised and stopped their plans and gradually it looked like it was all over and shares which were viewed now as a bargain went back up to over $100 gaining 25% this year. Yesterday they released poor earnings and worse still declining customers and shares tanked again down to $86 last night. Is this a bargain again?
The reason the missed forecasts was the cost of expansion in the UK and Latin America. I tried their service and it didn't work for me as the bandwidth here is too low so the streaming failed. I suspect the UK will have trouble for a while with streaming movies and its worse in Europe and Latin America. Also it appears that because they cannot license content from key players they have decided to become their own production company and make series, a costly and highly risky enterprise. They do however produce impressive cash flow. Despite their fall their P/E is enormous as is the PEG which puts me off. I think their share price was massively over inflated when they were at $250-300 and that maybe $86 is more reasonable for what is still a high growth company.
Bottom line, I don't think so. If I was a day trader yes, I would take a punt and sell when it went up 15-20% which I suspect it will. But I don't know about long term. Aplle is about to launch Apple TV, Google is about to launch Google TV and I suspect Netflix will suffer the death of a thousand cuts.
The reason the missed forecasts was the cost of expansion in the UK and Latin America. I tried their service and it didn't work for me as the bandwidth here is too low so the streaming failed. I suspect the UK will have trouble for a while with streaming movies and its worse in Europe and Latin America. Also it appears that because they cannot license content from key players they have decided to become their own production company and make series, a costly and highly risky enterprise. They do however produce impressive cash flow. Despite their fall their P/E is enormous as is the PEG which puts me off. I think their share price was massively over inflated when they were at $250-300 and that maybe $86 is more reasonable for what is still a high growth company.
Bottom line, I don't think so. If I was a day trader yes, I would take a punt and sell when it went up 15-20% which I suspect it will. But I don't know about long term. Aplle is about to launch Apple TV, Google is about to launch Google TV and I suspect Netflix will suffer the death of a thousand cuts.
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