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Been working on some other projects so I caught onto this board late.
As I said yesterday on the yahoo board as a long I'm not too concerned about day-to-day volatitlity. I once got lucky (and I admit luck when it wasn't investment foresight) and rode NVDA from $10 up to $60 through two stock splits, the volatility was insane.
I invested in NFLX becuase of it's operational fundamentals, not a TA anlaysis. Even with the price sagging in a few days none of my exit criteria have been triggered so I see no reason to panic. I'm here for the long run, years, and unless my exit criteria get triggered I'm staying.
Glad to see a board free of the spammers though, both pumpers and bashers drive me nuts!
Here are those Yahoo messages, reproduced here:
---------
Here's why I continue to hold (and add a few shares around the edges):
Facts:
1. Churn is low and getting lower (6.3% 4Q, 5.8% 1Q, 5.6% 2Q and guiding to range of 5.2-5.8% by 4Q 2003). I'll get to why this is one of the most critical variables in a minute.
2. Netflix business has strong seasonal effect. Growth accelerates in 4Q and growth rate peaks in 1Q. This has happened in 2001, 2002 and 2003 (1Q).
3. EBITDA of about $16 million in most recent quarter (25% of REVENUE) and normalized free cash flow of about $9 million in most recent quarter (15% of REVENUE). Normalized free cash flow includes adjustment per management guidance for lower levels of DVD purchases in future.
Judgements:
1. Netflix value proposition is real. Total subs of 1.147 million can't all be wrong. This many subs and relatively low churn proves the appeal of the service.
2. Market is much larger than 1.147 million subs. Think about it, netflix has a completely different model for renting movies. This requires a BIG change in consumer behaviour before someone signs up to be a sub. All subs have to make a big leap to convert behaviour from traditional model (go to store, look at shelves, pay for rental on per movie basis, agree to return to store within specified time limit and, in the VHS days, promise to rewind!!) to netflix model (give them your credit card number, search a database and build a que). It took me 4 months to get comfortable with this model as a customer. It will take lots of other people a long time before they sign up. This isn't bad. It's good because it means that it will take 4-5-6 years for this model to fully saturate the market. If we have 1.147 subs already it means that we've got a long way to go yet.
3. The Holiday season will happen again this year (although I will not be sending cards to shorts). Further, the Holiday seasonality effect of netflix business will continue.
Conclusions:
1. Piper Jaffray (7/18/03 report) estimated revenues for next 9 months are reasonable. They show revenues growing from $63 million in 2Q to $69 in 3Q, $76 in 4Q and $89.9 (I'd say $90) million at end of 1Q 2004. Notice the seasonality impact on results at end of 1Q 2004.
2. Since churn is low and falling and since the value proposition is valid and since the market has more room to go from here, it is fair to annualize the 1Q 2004 revenues of $90 million and say that we will have a $360 million revenue run-rate company in 8 more months.
3. Even with stated plans to invest in growth of business, I expect the company to deliver EBITDA and Free Cash Flow margins that are at least as high as what they just delivered (25% and 15%). Scale economies will at least compensate for additional SACs and inventory purchases.
4. Doing the math, we would have a company with annualized performance of $360 million revenue, $90 million EBITDA and $54 million of Free Cash Flow. Their balance sheet would also have at least $130 million of cash, by the way.
I'll provide some valuation thoughts in next message.
----------------------
So, what is the stock worth if the company achieves annualized performance of $360 million in revenues, $90 million of EBITDA and $54 million of Free Cash Flow by the end of 1Q 2004?
Answer = More than $23.50 current price.
Analysis:
1. Today's market cap is about $705 million (30 million share times $23.50 price). Note that 30 million share number assumes investor warrants are exercised. These warrants (6.8 million shares at $3.00 per share), if exercised would generate another $20.4 million of cash for the company so if you use the 30 million share number you should adjust pro forma cash balances up by $20 million.
2. Since the company is generating free cash flow, the cash on the balance sheet is "excess" and can be subtracted from the market cap in calculating Enterprise value (EV is standard analytical method calculated as market cap PLUS debt MINUS excess cash).
3. So, if the stock stays at $23.50 per share until 3/31/04, the market cap will still be about $705 million. The enterprise value will be about $555 million ($705 market cap plus $0 debt minus excess cash of about $150). The $150 of excess cash is comprised of $116 at 6/30/03 plus $20 million for warrant exercise plus estimate of $14 increase in cash next 3 quarters.
4. Now in April of 2004, we have an enterprise value of $555 million for a company that generates EBITDA of $90 million and Free Cash Flow of $54 million.
5. Here are the valuation multiples that result from the above. EBITDA multiple is 6.2x. The Free Cash Flow multiple is 10.3x.
6. I'm not going to explain what these multiples mean. I believe that these are way below market multiples for companies that generate these cash flows. This company valuation is cheap EVEN IF you assume that they have hit the wall in terms of growth. In fact, Netflix will still have a lot of growth and profitability improvement ahead in April of next year.
7. Can this company trade at double today's share price? Can it be valued next April at 12.4x EBITDA or 20.4x Free Cash Flow? I say yes because of performance, remaining growth potential and continued low interest rates (the lower interest rates are, the higher multiples assigned to cash flows).
8. I'm done.
I posted this in reply just now on the Yahoo board,
====================================================
Excellent post. The numbers you post are close enough to my own model. Your valuation model, thoughts, and conclusions are close enough. I'm glad you took the time to look out beyond the next 6 months to see what is in store for the company in FY 2004...indeed it looks quite lucrative. As the company secures its market stronghold via additional investments over the next 2 quarters, current shareholders should be rewarded quite well.
There are very thoughtful mesgs (20609 and 20610) on Yahoo by "holdingtilthebuyout." Response by "ic4x" in mesg 20615 is interesting. I am wondering if you guys still check the Yahoo boards. I'd be interested in what Ohio has to say about holdingtilthebuyout's comments. Does his numbers/estimates jive with yours?
Due for upside move in NFLX.
http://stockcharts.com/def/servlet/SC.web?c=NFLX,uu[h,a]daclyyay[dc][pb50!b200][vc60][iUf!Lk14]&...
There has been accumulation during this downdraft not distribution (look at chart above). Also, the wm% is in very oversold territory and last time we were here we bounced from $19 to $28.
Looks like 25.53 close, up a tad A/H to 23.65 @ 4:40pm per Yahoo, but Nasdaq shows a subsequent trade back at 23.53.
No volume to speak of A/H anyhow.
Doug
Re: Comcast, the nation's largest operator of cable systems, says it's getting promising results from its rollout of VOD, which permits cable customers to choose programming from a menu, start watching it whenever they choose and control it with VCR-like commands such as pause, fast forward and rewind."
Yeah, that's not the VOD that we need to keep an eye on. The term is too broadly used. In this case, they should have said "DVR". Digital Video Recorder. They are basically rolling out their own version of TIVO. They don't have the bandwidth to deliver any of 15,000 movies, when you'd like to watch them. Still limited to the normal programming and pay-per-view (at mnost 100 titles) selections.
Doug
Article on VOD ...
http://www.thestreet.com/tech/georgemannes/10101836.html
"Comcast, the nation's largest operator of cable systems, says it's getting promising results from its rollout of VOD, which permits cable customers to choose programming from a menu, start watching it whenever they choose and control it with VCR-like commands such as pause, fast forward and rewind."
- any thoughts?
Netflix fliers in Drugstore.com orders!
This just in: we opened a drugstore.com order and found a Netflix free trial flier! Talk about good focused marketing -- much more effective than stuffing the newspaper.
Now if they'd only stuff Amazon.com orders...
Oh, I agree. The site needs an upgrade. Utilitarian is okay, but it can be combined with a bit of style, don't you think?
Just as a side note and an idle thought, it occurs
to me that the new ad campaign may necessitate a
redesign of the NFLX web site. Hmmm? :)
(To be brutally honest, while I enjoy simple web sites
such as Google, my first and lasting impression of the
NFLX site is that its graphics are cheap. So I think
the new ad campaign will beget a nicer looking web site.)
Like I said, just an idle thought. :)
This is just one of the analyst coverages we can look forward to in the near future.
Standard and Poor's just released (Jul 19) a fact-balance-sheet on Netflix. (I get these from Datek/Ameritrade). This is a new thing -- before the last CC, there was no stock information available from S&P.
They offer no analysis, but rate it in the 90% percentile of their "investibility quotient", whatever that is.
BTW, the report also cites a 12-Mo P/E : 22.8
Fair enough. As I said, at worst it might just "seem" that way, and only if you're mildly paranoid, like me. LOL.
As for the broader market, seems that economic indicator, while positive, was a little less than expected. Still, not sure why the NAS was so bleak earlier. It seems to be recovering a little.
Here's to the next uptrend in NFLX.
Doug
I have never shorted NFLX. Traded in and out (long) several times. As I stated, no where near the profit that long term holders have had. However, I try not to fall in love w/ any stock (I did this w/ JDSU in 99 & 00 and it cost me plenty) and be somewhat mechanical in my trades based on the chart. No question, w/ my "style", I miss some good long term profits. On the other hand, it has locked in many profits for me...and that is why my "alias" is what it is...in part to help remind ME that it is ok to take profits.
When I invest, I look at the fundamentals and business plan to a certain extent (which NFLX's are very good) and then if those look ok, I go to the chart. I try to buy stocks at all time highs (on volume) or ones that have pulled back to 20 day ema, 50 dma or key support areas on lower volume. If it breaks below, I typically sell. When it goes up, I use the 20 day ema as support. That's sort of a general overview of my style and what works for me. I do break my "rules" on occassion, but have found that is only w/ varied success as compared to when I follow my rules. I try and follow William O'neil and Stan Weinstein's theory of investing w/ a little of my own mixed in.
>>No chart is going to tell you how many subscribers NFLX will gain this quarter. <<
Exactly.
You know, ok_to_take_profits, someone who didn't know better might think you were a more sophisticated short, of the damning-with-faint-praise sort.
I'm sure you aren't, it's just that when you put together the past several posts from the Yahoo board, together with your id, and this last post about 23.81 being "critical", and broader markets not mattering in one's evaluation of a stock's daily performance, well you can see how someone might reach the wrong conclusion.
Can't comment that much on "swing trading", except to observe that with NFLX, had one got nervous at the 22.5 top, one would have missed the 25 top, and similarly then the 28.xx top... I guess I'm saying it's volatile, and not going to go up in a straight line. I'm not sure the occasional small pullback is something so grim as a "breakdown", especially given the strong fundamental picture.
Of course, this is where I have troubles with TA, generally speaking. No chart is going to tell you how many subscribers NFLX will gain this quarter. And that # could radically impact the stock price when it comes out. Imagine 25% below forecast. Imagine 30% above forecast.
Another thing, these "averages" are too sensitive to the exact day one starts and stops the average to be all that precise. Sure, the blah-day average is 23.5438, at least until market close, at which point it suddenly becomes 23.83521. So the idea that it holds huge predictive potential seems doubtful to me. Of course the sad thing is, meaningful or not, the more people who "believe", the more it can actually become meaningful, at least over the short term. In the long term, either the company succeeds, or it doesn't.
Doug
Doug, not sure why overall mkt down...I tend not to follow the "noise" and instead focus on charts.
NFLX coming back a little. Really needs to close above 50 dma (23.83) or bad sign, imo. If breach of 22.5 on volume, then 20 area comes into play.
Overall market heading towards key support (975 SPX), 9000 DOW. SPX has shown a few distribution days over the last wk, usually 4-5 in a 10 day period or so tops the markets. OTOH, Naz has shown very little in distribution, despite strong sell off in terms of points, overall volume is lower today, which is good. OTOH (how many hands is that?!), the rally on Friday was also on light volume (not good).
For those long term investors who buy and hold, you have made nice coin and I wish I had gotten in on single digits like many of you. My personal style is swing trading. I let the winners run, but w/ a break of key support or moving averages, I sell.
NFLX chart starting to remind me of GRMN, which was a nice winner I rode from Dec until breakdown. Anyway, those are my thoughts. I am no expert but just trying to play the chart and ignore the noise as I said earlier.
Verne, not sure about leads, but I do recall that back in the boom, cable companies were spending a ridiculous amount of money per new customer, probably due to infrastructure costs. Something north of $1000. Given that the monthly cable bill probably averages out around $50 at best, that's pretty bad.
Netflix, at about 1.5x to 2x monthly fees, is great.
Doug
Another thought on today's action:
We could be seeing some mid-level NFLX managers selling today. That is, those folks who have sizeable blackout periods where they cannot sell, but are not large enough holders to be on the planned-sales program.
Most companies require they wait 2-3 days after an earnings announcement, and then the window opens for a month or so.
Given the run-up the past quarter, the Director of DVDs (e.g.) may well want to sell a few shares.
Just a thought.
Doug
I have always wondered how other subscription services value their custumors. What is a magazine subscriber worth, A cable customer, How about a beer of the month club member, A health club member, Golf club, Local phone service subscriber. The list is endless. Are they worth 10x monthly fees or 100x monthly fees.
I will look into this and compile some numbers and would appreciate any leads.
Short Interest numbers due out soon.
Does anyone know where they appear first? The WSJ?
I understand that it's 7 days after the 15th of the month, and includes data as of 3 trading days prior to the 15th (meaning any action that has settled by the 15th is included.)
Tomorrow is the 22nd. Will they appear in tomorrow morning's publications, or do we wait until the 23rd?
Doug
Edit: Per the earnings release, the float is about 16.5M as of June 30th.
Obviously NFLX still largely undiscovered. A PE of 22 for this stock? You have to be kidding. Cheap!
Interesting post, Zach.
On 3. Take seasonality into effect. I am not sure what summer does, but with many people on vacations a decline is possible. Remember that since the graph is relative (i.e.. Compared to all other domains) some of that seasonality is already controlled for.
I've got a comment: That seasonality may work in reverse for other sites-- it *could* be that some sites are used more over the summer (kids related?) while DVD renting (hence Netflix visits) decline, which would mess things up.
Any resource provide absolute numbers? Probably not, huh. I'd like to monitor absolute #s visiting the sign-up-submission-successful page. Heh.
Doug
Re: Stock action very bad. Not looking good, folks. The market may be turning on us.
Oh come on George. Cheer up. LOL.
It's not great, but it's not *that* bad. Sort of a less extreme copy of Friday so far.
Nasdaq off 30 isn't so good.
OTOH, Leading Indicator (of some sort) predicting recovery in economy in 2nd half, together with "Bull Market for Bonds Over?" articles...
Well, so far today, your prediction is doing fine... just got up here-- why is the broader market down today? This embassy thing?
Doug
Thanks for the article Zach.
To be honest, I don't think this will ever work. Today I think the market is pressuring NFLX down today. Along with the PR screw up with the earnings. Let's just hold that 50 DMA.
Traffic to Netflix website.
Netflix's entire business interaction is done on the web. Thus, a very important leading metric for it that will be able to capture the more fundamental metrics like churn and subs-growth is web traffic to its web site.
Therefore, I frequently monitor this link to see how netflix is doing in that respect.
http://www.alexa.com/data/details/traffic_details?q=netflix&url=http://www.netflix.com/
There are a few caveats to remember:
1. This is a relative graph that presents the rank of netflix among all internet domains.
2. Graph is based only on Alexa users. I am not sure whether that will introduce any bias in favor or against Netflix numbers but we need to keep it in mind.
3. There are a few absolute numbers that are posted (e.g. reach and hits per page) but they are displayed on a daily basis and don’t have available histories.
Here are a few insights from Netflix graph:
1. The graph is fairly volatile on a daily basis but Netflix has not established itself with a rank hovering in the 200-300 ranges. Any permanent movement outside these boundaries will be good/bad news depending on the direction.
2. Since June there has been some gradual improvement in the rank. users. I am not sure whether that will introduce any bias in favor or against Netflix numbers but we need to keep it in mind.
3. Take seasonality into effect. I am not sure what summer does, but with many people on vacations a decline is possible. Remember that since the graph is relative (i.e.. Compared to all other domains) some of that seasonality is already controlled for.
If we compare Netflix.com to Walmart.com we get an idea about the potential WMT threat. Remember that Walmart sells everything under the sun. Also, interesting to compare netflix with filmcaddy.com.
Any more detailed data on this measure will provide us with a fairly clear picture on what is happening with Netflix business model. During the internet boom there were sites offering this data (with much more detail) for almost free. Nowadays, I could not find anything. If you guys have some ideas, please share them.
Here is a link to a published research paper about web traffic and internet companies. For those interested, there are more references in the back of this article. It is a bit technical, of course, but it is interesting:
http://papers.ssrn.com/sol3/delivery.cfm/SSRN_ID244231_code001010590.pdf?abstractid=244231
An article on Disposable DVD's ran today in the NYTimes and other newspapers.
http://www.nytimes.com/2003/07/21/technology/21FLEX.html?ex=1059451200&en=0ba83001cef48ea7&e...
NFLX is mentioned there too. It might have affected some investors today.
Oh, BTW. Good to see all the insightful Yahoo posters here.
I am both long and a 3-out sub. Happy with the service and pumping it to everyone I meet.
I just don't understand why we're seeing the weakness on the back of strong earnings.
I say $22.5 is support based on more then just Friday's action. If you look back over the last few months, you will see how many times this stock has hit $22.5 and stuck there, either as support or resistance.
As for $24.5, I say that number based on the last couple of months, it has also acted as support and resistance for probably 4-5 times in that period. On the Yahoo board, I had a post about this the day before earnings that talked about the $24.5 range.
Stock action very bad. Not looking good, folks. The market may be turning on us.
Aggresiveness Lost in CC
I agree that the CC lacked a certain "attitude" , I mean did'nt the CFO basically call out the shorts in the last CC? PR screw-up was bush league at best. YOu only get one chance to report your first profit.....that is now sadly a lost MAJOR oppourtunity.
Thanks to whomever set this board up, Yahoo has become unbearable in the last week or so, too many newbies who take the bait from the bashers. We'll see what happens here.
See Ya!
Mtrd
I found the cc call a little strange for sure. I felt a little arrogance in attitude at times. Confidence is critical so its not a bad thing but I had a sense of immaturity in realizing what the market wanted to hear. I felt they let slip by such an opportunity to celebrate their great accomplishmants to date but it did'nt off. Cramer etc. jumping in with the wrong results certainly did'nt help. I hope the wrong perceptions get straightened out today. Where is comment from Weisel etc. nothing to the public from any analylist that I saw.
I agree exflixer. Reed blew the CC. I think Reed just wants to be super conserative so the company can blow away estimates. This will work in the short term, but as this stock continues to move higher and some tier one brokerage firms start following the stock, the brokerage firms will start catching on.
Although him being conserative doesn't change my view of NFLX performance.
Re: Looks like we are in a narrow range right now w/ $22.5 as support and $24.5 as resistance.
So, I don't understand that much TA, and I buy less than 25% of the parts I have come to understand, but that said:
Could you explain more about this 22.5-24.5 narrow trading range concept?
I'd sort of understand if, say, the past several days had seen the stock price wandering around between those values. But as best as I can see, that just looks like the intraday min & max from Friday's trading. In general, that statistic seems to imply very little about the next day's behavior, be it up, down, or about the same.
There was higher volume than normal, especially in the morning, I suppose. But it sure had the look of a short-term bottom forming in the morning, followed mostly by recovery throughout the day, which, as far as fundamentals go, has no reason not to continue on up back into the upper 20's again.
OTOH, your reported sell timing back around 28 and change turned out to be prescient, so I'm curious as to your feedback on this point.
tia,
Doug
Good morning folks (at least for us guys living in Eastern timezone.) Glad to be here, hoping for some rational discussion. I'm hoping Kart, Mortagage & SoW make it over here. Will continue to monitor the Yahoo! board, primarily, until some of the key participants show an inclination to post here.
I've had a little time to think over the last quarter and especially the CC. I've to confess Reed/Barry blew it big time during the CC, a new low. If I didn't know better I'd be dumping the stock too. Doing well in the market is half execution and half handling the street/media well. It is time NFLX stepped up to some higher class PR firm and executive coaching for CC's? Reed certainly seemed very uptight when delivering the quarter results, not as relaxed as he is during some of the previous CC's and investor conferences. I'm not sure if the lawyers are reigning him in.
Going forward, my read on the whole growth stuff remains the same as it was before the Q2 CC. Me thinks we'll actually start heading up back to our $27-$28 area very quickly. Haven't made any adjustments to my NFLX position, wish I had some dry powder to add to my position when we dipped to $23 range.
Hey George,
Thanks for joining the new board.
Doug
modom,
I think "now" is still a reasonable time to buy, if by now you mean a price at or near friday's close, or even slightly above.
Obviously, if I didn't think that, I should also be ready to sell my position, and I'm not. I think we're in the real acceleration point in the growth curve. Of course, that means there are risks, as well.
Regarding the Friday decline, if you look at the intraday chart, you'll see it was a bit more complex than that:
A steep early-morning sell-off, followed by a rise back over 24. I actually think tomorrow will close higher.
If your account is set up for options trading, you have some alternatives which you may find interesting:
You should be able to write August $25-strike PUT contracts for $250 per 100 share contract, or $2.50 per share. That is, say you want to buy 1000 shares, but don't want to pay $24.
Tomorrow, you write 10 Aug25 put contracts. You are credited $2500. If, come August (or perhaps sooner), your contracts are exercised (which will happen if the stock is still below $25 by August expiration for sure), you are required to buy 10 x 100 = 1000 shares at $25/share. Figuring in the $2500 credit you got, you end up paying $22.50 per share, instead of $24.xx.
Of course, there's the risk that the stock is above $25 in August (say it shoots up to $30), and you keep your $2500, but miss out in the gains you'd have realized if you owned the stock. There are other risks as well.
But basically, if you want to buy X # of shares, but for slightly less than the current price, and you are willing to risk potentially missing out, you can always write X/100 next-month Put contracts for a near-the-money strike, and make out better than just buying the stock most of the time.
Doug
As my wife (a confirmed Netflix customer) said to me this afternoon. Wal-Mart's "wholesome" ideology means they won't rent even remotely naughty films. Even if this isn't true of their on-lone efforts (hell, they might have "Debbie Does Dallas" as far as I know), their puritan reputation has to influence potential subscribers' opinions of what's available.
One of the things my wife likes about Netflix is the truly amazing selection of movies they offer. Obscure titles, foreign films, classics, and such. That along with the rapid turnaround -- even though we live in a very small town, we get films in a day -- makes doing business with them a very positive experience.
Now, my question for you who've followed this company for some time. Is now the time to buy? Or will Friday's decline continue for a while? I currently don't hold any shares in Netflix, but, given what I've read, I'm very interested in the company. Motley Fool shows the stock trading at 22.78 times earnings, which seems fantastic for an Internet stock.
I realize that my question is impossible to answer honestly, and that I must do my own research and make my own decisions, but knowledgeable input is always uesful in such matters.
modom
COMPETITION (vod - video on demand):
- VOD, at least on the visable horizon, is the only tech challenge that i can see ... currently, however, movie houses release post-theatre on a staggared basis ... first, they release to VHS and DVDs ... 1.5 - 2 months after that, it is then released to cable, VOD, satellite, etc. ... besides, it'll be years (3-5 years) before VOD becomes a meaningful challenge ... in the meantime, netflix will continue to build up its business ...
- right now, cable has pay-per-view but the problems are 1) picture/sound quality pales to DVD ... 2) movies have scheduled start times .... 3) selection is minimal ...
- the netflix mgmt is highly cognizant of the threat/opportunity of VOD ... they have executed superbly so far with their revamped business model ... and they have mentioned publicly that they are netflix, not "dvds by mail" ... hence, they have their eyes wide open and definitely keeping an eye on the developmen of VOD ... i believe that netflix has the capability, if the possibility exists, to be nimble and creative enough to adjust to a new delivery medium, such as VOD ...
- with netflix, there are currently about 15,000 titles to choose from ... think of having membership to netflix as having access to 15,000 titles ... this is virtually every DVD (outside of porn) ... wal-mart has about 13,000 ... blockbuster carries about 2,000 titles per store ... cable pay-per-view has less than a dozen per day? VOD?
***********
right now, netflix has a clear lead and has demonstrated that it can execute ... walmart just entered the marathon but netflix is 40 minutes ahead and cruising ... blockbuster may not enter the online race directly but may offer some creative monthly subscription plans to compete ... VOD will be a number of years before it can be considered a credible threat ...
go Netflix !
COMPETITION (blockbuster):
- a big problem is that 20% of the blockbuster stores in the USA are franchised ... let me present an analogy ...
- back when dell was surging with its mail order model, compaq tried to offer online/mail orders also ... but when compaq's retail vendors threatened to boycott compaq computers since compaq's actions would cannibalize the retail vendors' business, compaq had no choice but to back off ... because compaq relied so heavily on the retail vendors (i.e., circuit city, best buy, etc.), compaq couldn't take the risk of losing their business ... so their hands were tied ... the same problem faced pretty much every computer manufacturer that relied on the traditional sales model of selling thru retail outlets ... they could not create an alternate channel (direct sales) to compete headlong with dell for fear of a backlash from its existing retail partners ...
- blockbuster is in a similar situation ... currently, they bought and are operating a DVD online rental business called filmcaddy.com ... however, they offer zero advertising of filmcaddy.com in their retail operations ... why?, i suspect it may be because the 20% store/franchise owners may cause an uproar ... why would franchise owners want to support anything that may cannibalize their retail business? ... so for now, i believe that blockbuster is simply using filmcaddy.com to guage/experiment in the online space ... i have doubts that blockbuster will ever go full force in the DVD online rental space ...
- blockbuster's best bet is to probably offer some creative subscription based services thru their retail outlets ...
- overall, netflix has created the online DVD rental market ... they have a clear and long lead in this space ... although it is growing, it will remain a niche market ...
- blockbuster will remain a cash cow for years to come ... netflix will not kill blockbuster, however, it will continue to grow and remain a viable business ... netflix shorts are wrong and screwed ...
COMPETITION (wal-mart.com):
- wal-mart.com ... wal-mart announced about a month ago that they will now pursue fully the DVD online rental space ... prior, they did a 7 month trial ... they currently have approximately 25-30,000 customers ... initially, i thought that walmart would simply go in and crush netflix because, well, they're walmart ... after all, who is the slayer of kmart and who is pushing toy'r'us to its knees? ... so my initial thoughts were that netflix may be a good short candidate ...
- then i did the analysis ... wal-mart dominates in the brick and mortar business ... but wal-mart has yet to manifest anything remotely herculean in the online space ... i remember when walmart.com was initially launched, ppl said walmart would crush amazon.com ... they were wrong ... walmart.com is an entirely different animal from its retail mother ...
- a pivotal point in my change of heart was when i discovered a legitimate reason for the DVD online rental busines to not receive the full support of its "mom" ... let me backtrack ... initially, i thought that walmart could simply leverage its millions of foot traffic by advertising the online business in-house (free) ... but the problem is that wal-mart would then begin to cannabilize its DVD sales ... so until i actually see inhouse advertising, i think there's a fair chance that it may not happen ... without the in-house marketing support, walmart.com DVD rental is on par with any other online DVD rental operation (other of netflix) ... which is to say, they are not in an enviable position ...
- right now, netflix's 1.15 million customers dwarfs wal-marts paltry (est.) 30,000 ... netflix has executed very successfully Q after Q since going public a little over a year ago ... they are a pure play and experts in their space ... this is in contrast to wal-mart.com being a small division of wal-mart the corporation ... netflix is nimble, has a large lead, and has reached a critical mass whereby ... 1) model is proven ... 2) a GAAP profit has been earned in Q2 of this year (report in mid-july) ...
- wall street and others think walmart will crush netflix ... i have strong doubts ...
Hey everybody. Great idea w/ new board. Hopefully this is a "gated community" to keep the rift-raft out.
Looks like we are in a narrow range right now w/ $22.5 as support and $24.5 as resistance. Stochastics are quite oversold so would be nice to bounce Mon. A number of the leading internet stocks have been hit and are around their 50 dma including YHOO and AMZN. The chinese internets bounced nicely on good volume on Fri (SINA especially), so hope we see the follow thru.
NFLX's PE: Is Yahoo right?
The company is listed with a PE of 26 or something now. We're entering bargain-hunter territory.
Glad to see the best from the Yahoo board here. SOW?
swim,
Don't underestimate the impact of a PR screwup like the earnings release headline #. They got so excited about reaching GAAP profitability that they forgot the cardinal rule of earnings releases: You always highlight the # computed using the same standards that the estimates are formulated with. That means pro-forma, i.e. Non-GAAP.
When you don't, what happens?
Immediately, you get bogus online (and on-air) reports to the effect that NFLX "missed". The stock plummets A/H immediately. Even though corrections may be issued soon thereafter, other folks are like, "Why is it selling off? There must be something wrong." That taints the reaction, no matter how many corrections there are. It is short-term damage that cannot be undone. As the stock drifts down, it triggers options-related momentum, as July call holders scramble to realize gains.
The upside is, given a weekend to digest everything, and with near-term options-related pressure gone, the reality of great earnings and inline-to-upped guidance should sink in, along with some speculation about the ease with which the company could beat guidance for the next two quarters, given the low bar they set for themselves.
Or so we longs would hope.
Doug
> Now onto NFLX, I plan to add to my position if NFLX drops below $22. Is anybody else going to be a buyer in that range?
I'll second that. I wish I'd caught the dip to 22.5ish on Friday. That may be the "18" of July. I'm guessing that absent a major calamity in the broader markets tomorrow, NFLX will be up a buck or so.
We need a little uptick here! Last week was tough for all of us. I want to see NFLX form a bottom right here and move up this week for a little relief. As I stated in a few posts on the old board I can't remember a stock making a profit for the first time reacting the way it did. Sure a little confusion on the release #'s but name a stock that fell flat with that kind of report? These guys are doing the right thing with their guidence but (and I know the market is always right) I thought we deserved a little better stock reaction then we got.
Interesting board. This well keep out the NSIP and his followers.
Now onto NFLX, I plan to add to my position if NFLX drops below $22. Is anybody else going to be a buyer in that range?
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Company Address:
Investor Relations Department
100 Winchester Circle
Los Gatos CA 95032-7620
480.540.3700
CIK: 0001065280
Netflix, Inc. (Netflix), incorporated on August 29, 1997, is an Internet subscription service streaming television shows and movies. The Company's subscribers can watch unlimited television shows and movies streamed over the Internet to their televisions, computers and mobile devices, and in the United States, subscribers can also receive digital versatile discs (DVDs) delivered to their homes. The Company operates in three segments: Domestic streaming, International streaming and Domestic DVD.
The Company obtains content from various studios and other content providers through fixed-fee licenses, revenue sharing agreements and direct purchases. The Company markets its service through various channels, including online advertising, broad-based media, such as television and radio, as well as various partnerships. In connection with marketing the service, the Company offers free-trial memberships to new and certain rejoining members. It utilizes the services of third-party cloud computing providers, such as Amazon Web Services, as well as content delivery networks, such as Level 3 Communications. The Company also ships and receives DVDs in the United States from a nationwide network of shipping centers. As of December 31, 2011, the Company offered subscribers the ability to receive streaming content through their personal computers (PCs), Macs and other Internet-connected devices, including Blu-ray players and televisions, digital video players, game consoles and mobile devices.
The Company obtains content through streaming content license agreements, DVD direct purchases and DVD and streaming revenue sharing agreements with studios, distributors and other suppliers. The Company obtains content distribution rights in order to stream television shows and movies to subscribers' televisions, computers and mobile devices. Streaming content is generally licensed for a fixed-fee for the term of the license agreement. The Company acquires DVD content for the purpose of renting, such content to its subscribers and earning subscription rental revenues, and, as such, the Company considers its direct purchase DVD library to be a productive asset.
The Company competes with HBO GO, Showtime Anytime, SkyGo, BBC iPlayer, Time Warner, Comcast, DIRECTV, Echostar, AT&T, Verizon, iTunes, Amazon.com, Hulu.com, Hulu Plus, LOVEFiLM, Google, Blockbuster, Redbox, Best Buy, Wal-Mart and Amazon.com.
COMPANY PROFILE
With more than 50 million streaming members in the United States, Canada, Latin America, the United Kingdom, Ireland and the Nordics, Cuban, France, Germany, Netherlands, plans of expansion to Japan in 2015, Netflix, Inc. (NASDAQ: NFLX) is the world's leading internet subscription service for enjoying movies and TV programs. For one low monthly price, Netflix members can instantly watch movies and TV programs streamed over the internet to PCs, Macs and TVs. Among the large and expanding base of devices streaming from Netflix are the Microsoft Xbox 360, Nintendo Wii and Sony PS3 consoles; an array of Blu-ray disc players, internet-connected TVs, home theatre systems, digital video recorders and internet video players; Apple iPhone, iPad and iPod touch, as well as Apple TV and Google TV. In all, over 800 devices that stream from Netflix are available. For additional information, visit www.netflix.com. Follow Netflix on Facebook and Twitter.
Netflix also initiated self original series/movies: Netflix production. Including Orange is the New Black, House of Cards, Lilyhammer, Unbreakable Kimmy Schmidt, Bloodline, Marvel's Daredevil, Grace and Frankie, Sense8, Narcos, Chef's Table, etc.
All for $8.99 a month, EXTRA IF DVDS by mail plan.
Recent News:
http://finance.yahoo.com/q/h?s=NFLX+Headlines
http://news.google.com/news?as_q=netflix&svnum=10&as_scoring=r&hl=en&ned=&btnG=G....
Filings: http://www.sec.gov/cgi-bin/browse-edgar?company=&match=&CIK=0001065280&filenum=&State=&Country=&SIC=&owner=exclude&Find=Find+Companies&action=getcompany
Various Netflix related links:
http://www.hackingnetflix.com/
http://netflixfan.blogspot.com/
http://movies.groups.yahoo.com/group/Netflix/
Share Structure:
Outstanding Shares
424.36 mil shares as of Jul/15/2015
97% inst. own
Investor Relations:
http://ir.netflix.com/
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