Netflix generates Billions of dollars from a simple process. Encode and deliver content. The 30 million they spent is off set by the DVDs they don't have to send out. Blockbuster went out of business due to their location lease overhead. Netflix does not have brick n mortar locations. So with the savings on the delivery they can replace cable for many people. I would much rather pay 8 for NFLX and stream a movie tonight than watch the garbage that is on the Cable stations. 150 plus stations of nothing. The new streaming html5 format may open up more doors to the tablets and this will increase the subscribers. Its a Cash Heavy company that has a great growth potential. The downside is management.
You missunderstood. The 30 mill was the price of one movie's rights. It doesn't matter if it is sent out or broadcasted online, you have to pay for rights either way. Also about growth potential. It is probably safe to say that the US market is already saturated and whoever wanted to sign up, they already did, thus they have approached their ceiling. Their could be growth overseas, but that brings a bunch of other kind of problems, not to mention higher movie rights...
My daughter uses our netflix but in two years when she is off to school she will want her own. Us older folks watch Cable while the younger people want their content on the run. On the trip to school and back or even on the way to the job interview. The 30 million is a discount if its a good movie anyway. What movie was it anyway. The Wii in the house is no longer used for games its used for Netflix. If they put in some downloadable games in the mix then we could see the subscriber base explode. If they start offering books online too as rentals that could be huge. DVDs are like a trojan horse. They could charge to send coupons to their client base. Reed if your watching -- That one was free.
I signed up on day one in the uk on jan 6th this year. I will have my whole family signed up soon. It is a great service.
Imagine the subscriber growth to new markets with little to no delivery costs. I think a squeeze is coming if we past 115. Settlement Date Short Interest Avg Daily Share Volume Days To Cover 12/30/2011 9,137,555 3,806,963 2.400222 12/15/2011 9,883,663 7,886,346 1.253263 11/30/2011 10,873,513 8,442,013 1.288024 11/15/2011 8,870,727 6,546,414 1.355051 10/31/2011 9,285,174 12,970,984 1.000000 10/14/2011 8,934,049 10,732,468 1.000000 9/30/2011 8,101,524 16,883,709 1.000000 9/15/2011 9,563,372 6,201,725 1.542050 8/31/2011 8,545,575 4,192,300 2.038398 Read more: http://www.nasdaq.com/symbol/nflx/short-interest#ixzz1jkP1JHkD Its a heavy cash business so I am curious to see how they use the subscriber revenue to lay down debt.
I will tell you a dirty little secret. She can still use your subscription while 1000 miles away. I am not sure why Netflix lets you to do that, but our kid in college was still using my subscription, so no extra money for Netflix. Also, kids love to torrent, instead of subscribing. Oh yeah, in college the kid got notification of heavy internet usage, so he had to knock off the unlimited streaming. There are other costs involved: 1. They need more servers for the bigger demand. 2. The rights for each movie will be more expensive when it includes other countries.
Okay all jokes aside. I think that since NFLX broke the 100 dollar mark yesterday at the close there are some really big players into the stock which may be buyers strictly on program buying. Its a heavy cash business which if they don't lose more customers than they maintain they can drive EPS by cutting costs. I was by the Redbox box by walmart yesterday and I kept thinking why not check to see if they have any of my movies that I wanted to rent. But then I thought: If I rent it here I have to pay gas to bring it back then I have to load the dvd and what happens if the dog gets a hold of the disk. I really see why the streaming model makes sense. That dvd would cost me over $2 to rent with time and gas alone. NFLX - they said was bankrupt and now they say its paying too much. So I just have to say that if they pass Section 181 again maybe you and I may produce a movie this year. if it goes to 101 today then the next stop is 115 and then a squeeze to 120 buy some calls above 102. just my thoughts and simply a hunch. RH- How you like me now....
NFLXââ¬Å½ - Netflix, Inc. (NASDAQ)ââ¬Å½ 103.78 +5.24ââ¬Å½ (5.32%ââ¬Å½) Jan 19 10:31am ET - Disclaimer Open: 99.66 High: 104.39 Low: 99.66 Volume: 3,485,191 Avg Vol: 8,643,000 Mkt Cap: 5.45B in 1 hour into the trading day the volume is almost 1/2 the trading avg. Volume always supercedes price. A squeeze may happen. That analyst that downgraded the stock has no clue as to the power of streaming video. This is one to watch. Also remember the Game potential of Netflix has yet to be tapped. If The insiders start buying here then maybe they can show some support. Any good options plays here -Anybody with some suggestions?
Optionplay: http://seekingalpha.com/article/320545-now-is-the-time-to-buy-netflix-s-volatility?source=yahoo Also check out the guy's description of the earnings play strategy: http://seekingalpha.com/article/310...loiting-earnings-associated-rising-volatility