Bad accounting at NFLX

Discussion in 'Stocks' started by chaosclarity, Sep 17, 2011.

  1. I believe there was an expert on Bloomberg and one in this forum that pointed out the bad accounting at NFLX. Remember the CFO resigning from the company for supposedly "personal reasons". I kept these events in the back of my mind and wondered if it was true...the stock price kept going up after the expert interview and the CFO resignation. However, now I believe the news not to be rumors, but the truth. NFLX is cooking the books gentlemen and the CFO departure was for good reason. If something goes down at NFLX where they are cooking the books ala "Madoff" then whoever is the CFO will be investigated by the Feds. Good move on the former CFO's part...
  2. the accounting concerns there are primarily that they are not depreciating their acquired content purchases (which are capitalized) fast enough. If you look at capex for content acquisition for the past few quarters, it has vastly exceeded depreciation of content costs.

    No one really believes there is fraud, just that the accounting is aggressive and overstates their margins. It is likely that they had to raise their prices aggressively recently because content is getting more and more expensive.
  3. If there is no fraud, then how come everyone is selling out of the stock? Its like a run for the fire exit. No fraud? Then why panic sell?
  4. a basic review of recent company announcements will answer that question for you
  5. Look at the type of people that buy NFLX and you will knwo the answer.