09-19-2011, 10:36 PM
I am very unhappy with recent events, because I had two (expensive) NFLX call spreads that were up very nicely, and now are basically worthless 
However...I think the model is sound, and I think they will either rebound, or get bought out by someone else (eg Apple) at a nice premium, now they are down about 50% from their high.
They have two big problems. One is competition, but I think that is overblown. They have their software EVERYWHERE - TVs, blu-ray players, AppleTV, smart phones, tablets, etc, etc. Just about everyone has access. That is not true for Amazon or Apple or Microsoft.
The other more serious one is content cost. Now they are so successful, all the providers want to charge them more - way more. Their deal with Starz is about to expire. They offered Starz 10 times more than the original deal. Stars said no.
Still, all obstacles that can be overcome. Streaming is the future, and they have the advantage of being in everyone's home already. The stock tanked first because they raised prices (a GOOD move - they want to wean off mail subscribers) and then again because they lowered their subscriber projections. But...while the numbers for mail subscribers was down something like 30% (again, good thing), for streaming subs it was only down like 0.1%. And yet they've lost half their value...
I will likely buy some calls tomorrow.
However...I think the model is sound, and I think they will either rebound, or get bought out by someone else (eg Apple) at a nice premium, now they are down about 50% from their high.
They have two big problems. One is competition, but I think that is overblown. They have their software EVERYWHERE - TVs, blu-ray players, AppleTV, smart phones, tablets, etc, etc. Just about everyone has access. That is not true for Amazon or Apple or Microsoft.
The other more serious one is content cost. Now they are so successful, all the providers want to charge them more - way more. Their deal with Starz is about to expire. They offered Starz 10 times more than the original deal. Stars said no.
Still, all obstacles that can be overcome. Streaming is the future, and they have the advantage of being in everyone's home already. The stock tanked first because they raised prices (a GOOD move - they want to wean off mail subscribers) and then again because they lowered their subscriber projections. But...while the numbers for mail subscribers was down something like 30% (again, good thing), for streaming subs it was only down like 0.1%. And yet they've lost half their value...
I will likely buy some calls tomorrow.
Ex SWG, L2, CoH, Wow, and War
Currently PvPing in the stock market
Currently PvPing in the stock market