just sold nflx at 21 yesterday
 

pickd it up at 14, sold at 21... i really wanted to hold on to it for longer, and i know its got a short sale rally going on it seems.

anybody have any comments on whether this was the stupidest thing to do? or was it the right move? im just looking for another opinion on the stock.

Re: just sold nflx at 21 yesterday
 

does anyone have any opinions on this stock? im a firm beleiver in it. its been steadily climbing for months now and i think its new floor has to be at least 18 or 19.

i was thinking it would hit 28-30 by jan of '06.

im just wondering if other people think its grossly overrated or its value is inflated and why.

anyone?

....

anyone?

Re: just sold nflx at 21 yesterday
 

Assuming you're talking about Netflix, isn't the competition going to just eat away their profit margins? I'm no MBA, but the rental business looks like something that's going to get commoditized to the point where one can only make the slimmest of margins, which isn't that great for the growth prospects of the company.

There's no loyalty when it comes to renting videos; to use a poker analogy, if you see a better rakeback plan at a different skin, you're just going to take that better %, meaning the affiliate makes less and less money until they make virtually nothing.

Re: just sold nflx at 21 yesterday
 

What is netflix competitive advantage?
How many members do they have? How many members does Blockbuster have?

Wouldn't you prefer to have the option to exchange your videos at a local store if you need immediate turn around?

Which company has more at stake in the movie rental business? Which company has more resources to compete in that market?

Most importantly, what do you think the future of media is? Will people be getting their movies through DVD rental? What if a movie could be had instantly, would you wait to get a movie in the mail? IS netflix able to participate in your expected market shift?

If your answers to these basic questions are favorable to netflix then go ahead and own it.

Re: just sold nflx at 21 yesterday
 

[ QUOTE ]
i was thinking it would hit 28-30 by jan of '06.


[/ QUOTE ]

Without any consideration to my own opinion, if YOU thought it was going up 40% in the next 5 months, why would you sell it?

Re: just sold nflx at 21 yesterday
 

[ QUOTE ]
There's no loyalty when it comes to renting videos; to use a poker analogy, if you see a better rakeback plan at a different skin, you're just going to take that better %, meaning the affiliate makes less and less money until they make virtually nothing.

[/ QUOTE ]

The majority of poker players have no idea what rakeback is. In fact, one of the reasons why Party is so negative on rakeback, is because of the power of their non-rakeback affiliates.

Additionally, there are differentiating factors between rakeback affiliates other than rakeback %. Chasing the best % deal is ultimately a losing proposition.

[ QUOTE ]
Assuming you're talking about Netflix, isn't the competition going to just eat away their profit margins? I'm no MBA, but the rental business looks like something that's going to get commoditized to the point where one can only make the slimmest of margins, which isn't that great for the growth prospects of the company.

[/ QUOTE ]

Netflix is in a much better position to hold its own against Blockbuster in the mail order rental market, because it doesn't have all the overhead required to keep Blockbusters B&M business going.

Re: just sold nflx at 21 yesterday
 

[ QUOTE ]
If your answers to these basic questions are favorable to netflix then go ahead and own it.

[/ QUOTE ]

While your questions are all good ones, they don't add up to a reason to buy the stock of any company.

You have left out many even more important questions, including, is the stock fairly priced based on your answers.

Re: just sold nflx at 21 yesterday
 

Netflix has the "first mover" edge in its industry. I've been long a couple of years now. There is an economy of scale in this business and since NFLX has way more subscribers than any competitor, it is able to maintain better profit margins. Additionally, b/c of their size, they have more titles and distribution centers, so their turnaround time on movies is the fastest across the US.

Consider this, WalMart recently quit the DVD-by-mail business. Because of their other revenue sources, it would seem that Walmart could have easily run into the red for a while to acquire customers. It appears that despite offering the lowest price of any major DVD-by-mail service, by the time they quit and gave their customers to Netflix, that number of subscribers had "a negligible effect" on NFLX subscriber counts.

So, with Walmart gone and Amazon still sitting on their hands, Blockbuster is the only major comptetitor and they've got debt issues to the extent that is sounds like they are considering raising prices. They'll never gain subscribers this way. BBI's debt is like a huge pair of handcuffs. This is on top of the fact that they've lost a ton of consumer trust with that "No late fees" scam.

Buy it back,
-w.a.

Re: just sold nflx at 21 yesterday
 

I think his point was that Netfilx would not be fairly valued unless the answer to all of his questions was yes. Netflix has enough growth priced in that it must have a superior busines model to be a good long term holding. I agree that to have a competitive advantage, it must meet the criteria in his post. Personlly I don't think it is likely that it does, but it just might. This is extremely speculative to me.

Disclaimer -- I make no short term predictions on any stocks. My posts typically reflect mid to long term predictions on a business and its valuation.

Re: just sold nflx at 21 yesterday
 

You think you will be renting DVD is 10 years?