They buy it based on the technicals and not the fundamentals. Chartists buy it, value buyers avoid it, stupids short it
With the new iPhone app, there will be tens if not hundreds thousand new subscribers. The company has actual cash flow, unlike shops back in 1999. One of my favorite sites.
NFLX offers an amazing service at an attractive price for movielovers. However, their current stock price is ridiculous given the growth outlook and actual FCF generation. Of course the saying remains true that "the market can stay irrational longer than you remain solvent" so this is simply a tale of (as someone mentioned earlier) the chartists going long and trading and the value guys saying "screw this crap" and idiot ballsy retail traders who think their 100 share short will be proven right. If you want to make a downside bet on NFLX do a put ratio spread (3-5 months out) for a small net debit. Yeah, you'll tie up some margin but at least you won't lose some significant capital and be cursing at the monitor the entire day.
They've changed the whole dynamics of watching movie at home-no more going to blockbuster/hollywood videos to rent it, or even in mail. With new tv connected to net click and s watch it instantly-hurts the likes of on demand movies too where you paid $5.99 for one movie-watch unlimited for 9.99
i have been a netflix customer since day 1, and get it. However it doesnt justify their $123 price (that's a 55 PE!!), agree this shit is crazy. Glad i didnt short it, but when this pig falls after all the lemmings are onboard, it will be spectacular.
NFLX keeps going up because people are buying it. People are buying it because it keeps going up. Some analyst firm just raised the price target to $190, which gave a whole new load of people permission to pay more than $120 for it
limitted float, and people want to own it- for good reason. I would make a strong bet that Netflix's earnings 1, 3, and 5 years from now will be higher than they ever have been. However, maybe it's overpriced. On the other side, people said AAPL's stock was overpriced in the 80's, and the 90's, and so far those people have been very wrong. NFLX will probably be a similar growth stock, that value investors will always cringe at.