Diggin' technology every day

October 25, 2011

Netflix’s Buzzsaw

Filed under: Random Thought — Tags: — Nate @ 6:39 am

The blurb I just heard out of CNBC which was kind of funny was was anyone willing to go long into that buzzsaw last night?

I know I said it’d be a while since I wrote about Netflix but I have written some other things since. The situation is just so funny I wanted to laugh in public with their stock down to $76 in pre-market trading from about $118 when the market closed yesterday (off original highs of $280 in early July).

Again from CNBC

Headline from a few of the analyst reports

  • Broken story
  • Unsustainable model
  • Nuclear winter
Name of FirmPrice target
Price target
Goldman Sachs$75$200
JP Morgan$67$205

The boldest call on Netflix Janney Capital with a target of $51.

For some reason I was thinking of it more along the lines of a wheel falling off a car when it was going 60 MPH down the highway. It was a momentum stock after all right.

The main story seems to be the loss of subscribers, and not being profitable over the next year or so due to costs associated with expansion into other markets. They lost more than 800,000 subscribers in the quarter, myself being one of them.

“What we are seeing is a second wave of cancellations from the pricing increase,” said Chief Executive Reed Hastings, during a conference call with analysts.

Oh, and this is AFTER they reversed course on the whole Qwikster thing. I would love to see what Netflix management is talking about now, let me get some popcorn first though.

A guy from CNET says Netflix actually had a net loss of roughly 1.8M subscribers for the quarter, since Netflix typically adds 1M subscribers in the quarter and this quarter they lost 800k. so 800k lost + 1M not gained = 1.8M lost on a service that has less than 24M subscribers.

Hey Netflix, I’ll probably be willing to come back(and pay more) if you increased your content catalog by at least, say 500%.

Content certainly seems to win over distribution in this story.

(I’m not an investor in anything, situations like this are why I like to watch CNBC – it’s so funny for some reason)

Powered by WordPress