Netflix Inc (NFLX)

[FrancisUnderwood]

I don't see a company that, if they are able to meet their ambitious growth projections, will be selling for 3.5x revenue in 5 years time, as a good deal. Any company trading at 3.5x rev better have some pretty damn impressive growth projections. So in 2020, with double the subscribers, a saturated North American market, and significant international growth, would NFLX still have enough growth potential to warrant trading at 3.5x rev (assuming that NFLX doesn't appreciate in the next 5 years)? NFLX is already a huge company, and baking in enormous growth is only realistic in the junior stages of the company; Netflix is already saturating the largest market in the world, and by 2020 will have completed this task.

Then there's the fact that all of these great things that NFLX is doing many of which I personally love, are open to ANY company in the world; NFLX doesn't have a patent on sports broadcasting, nor do they have a patent on streaming content. All of these things could be done by anyone, at great cost.

We can't use the previous environment that NFLX thrived in as a basis for future comparisons; NFLX created this niche, and has shown that it can be profitable; others are now moving into this niche, and will continue to do so until it is no longer a lucrative trade. NFLX simply does not have the size to create enough meaningful barriers to entry. I still like what NFLX is doing but I'm kind of thinking about shorting it.