NFLX had a strong break through previous resistance today on no particular news I can find. They face quite a bit of competition from many sides, and I'm curious what the appeal of the stock is at this price (P/E of 35). I'd expect a P/E like that on a retail-type company where the competition was almost nil and barriers to entry were high. Any input on the driver for this kind of valuation?
Basically NFLX can be either a $45 to $75 stock. You can not really value it. It has some competitors and great potentials. Since Satellite TV fishing was stopped from a year ago, NFLX customer numbers have gone up. I don't see redbox as a competitor to NFLX.
maybe their TOS has more to do with increasing customer count, it is worth a read, especially the parts about "forced retention". the point could be made that the service could be canceled, but it is designed to exploit peoples natural procrastination as to Redbox being a competitor let's think about that....at Netflix for $15 a month a person can get about 4 movies per month if they are shipped or about $4 per movie...at Redbox you can get a movie for about $1 with no contractual obligation....and you can get the Redbox movie while you are shopping for something else like groceries. with the economy the way it is which would you rather do,,,rent 4 movies per month or 15 movies per month for $15 ?... watch the number of rentals per box that Redbox rents per day, it might just enlighten you.
I am not sure where you get your "about 4 movies per month". With my subscription, I can have two movies at a time and there is no limit on how many movies a month I watch. If I watch two a week and send them back, I can easily get 8-10 movies a month for my $15 subscription. Moreover, I have the option to view many movies instantly on my laptop, iPad, or TV. I never have to leave the house to rent or return a movie, and I have a queue of movies that is about 60 deep that I just keep adding to. I have nothing against Redbox, but Netflix has a pretty strong value proposition at a cheap price if you like to watch movies.
I agree with you. I have never traded Netflix. I was subscribed to Netflix for over 18 months and I had no problem with them. No overcharge. no mail missing,..... no screw up. Redbox is for someone who wants to watch a movie once a month. Many times I wanted to rent a movie but someone had hugged the box for literally an hour and ignoring the people waiting. That sucks.
NFLX is nice to trade, it has strong upside breakouts because of the short interest, and if it puts in a double top or a lower high after a strong run, it pulls back very nicely for a decent counter-trend play. I'm watching for that today.
NFLX is a mind boggling stock. Great buy several years ago when they first came out. I could see the potential. Now? Hmmm... I don't know, but it's still not a very big company. I can't see how else it will grow, though. Maybe get into games? There are several factors working against them: shortened mailing week may cause consumers to flock. Although, there is an added bonus that they have reduced overhead for shipping and returning DVD's! Studios are not interested in working with NFLX. Competition coming out in the droves. I see people lining up to Redbox all the time. Blockbuster is putting on the some new gloves and have studio support, shortened mailing week, B&M presence, games, and they are looking to rent video games too. I hate investing in competitive spaces like this. The best thing to do is wait for a minor pullback on NFLX, buy a 10% stake, and hold it. I would also go 1% long on BBI. If BBI is able to come back from the brink, you could easily find a 4 bagger going forward.
I have to agree with you. Stocks like NFLX, AMZN, SHLD are priced for massive growth going forward, but I don't see any lack of competitors, barriers to entry, or economic backdrop supporting their high valuations.