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Netflix stock $300 ---> $161 since July price hike! UPDATE: $106!

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trmiv said:
Yea it was how poorly they handled the price increase that pissed most people off. If they would have handled it better, offered some concessions to current customers like a couple of months free, or a discount or whatever, it wouldn't have been so bad. Instead it was basically "We're raising prices 60%, deal with it bitches." That arrogance pissed off a lot of people.
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Exactly. They didn't say "Unfortunately, due to content licensing cost increases, we're going to increase your subscription prices. But here is what we're adding to give you additional value:" That was a big mistake.
 
BlahBlahYouToo said:
the price increase was probably necessary. people just bitch whenever price goes up.

yeah, the qwickster spinoff wasn't the smoothest but they undid it, so what is really driving their stock price down this quickly?
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Wall street. This isn't Ma and Pop jumping ship. They bubbled it and then they pummeled it, and the CEO's arrogance made it easy.
 
AstroManLuca said:
Proves that whoever is in charge of making decisions at Netflix has no idea how to run a business.
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imagesnetflix.jpg
 
IndyColtsFan said:
Hastings' goal was to no doubt prepare the DVD business for a sale and while it is probably the right thing to do in the long-term, Netflix doesn't have the streaming selection currently to make it a viable decision now IMO.
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All reports I've read have valued the DVD business at roughly $20/share. The DVD business is tangible with no content acquisition contracts to worry about. With the streaming service now projected to be a loss in the near future, what would be left if they sold the DVD business? A company with a pretty red logo and tenuous streaming content contracts? If even considering it, someone like Jeff Bezos should be considering an offer of $30/share and not a penny more. And that's only if they stop insulting profitable DVD customers, which might have already left (like me). The next drop will be in February when they lose Starz and Disney which provide most of their recent (relevant) movies.
 
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aldamon said:
All reports I've read have valued the DVD business at roughly $20/share. The DVD business is tangible with no content acquisition contracts to worry about. With the streaming service now projected to be a loss in the near future, what would be left if they sold the DVD business? A company with a pretty red logo and tenuous streaming content contracts? If even considering it, someone like Jeff Bezos should be considering an offer of $30/share and not a penny more. And that's only if they stop insulting profitable DVD customers, which might have already left (like me). The next drop will be in February when they lose Starz and Disney which provide most of their recent (relevant) movies.
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Hastings' view is that the operational costs of the DVD business (you have to buy the discs, you have to have warehouses full of them, you have to staff those warehouses and mail the DVDs out, etc) are too much and he feels that streaming media will make them obsolete. In his view, he should sell the business off in the next few years to try to get some money out of it.

You bring up a lot of good points above and are correct, but the bottom line is that their streaming selection can't compete with their DVD selection and to make it compete would probably bankrupt Netflix. I mean, even within Netflix's streaming series selection, some of the shows (like A-Team) don't even have all the episodes available via streaming -- you have to get the DVD to see those episodes.
 
IndyColtsFan said:
I mean, even within Netflix's streaming series selection, some of the shows (like A-Team) don't even have all the episodes available via streaming -- you have to get the DVD to see those episodes.
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I don't doubt that this is in fact the case with many TV shows, but are you certain that there are actually missing episodes? Because I've come across a few TV series where a few episodes are listed as "DVD only," but it turns out those were special features or behind the scenes stuff, and none of the episodes were actually missing.
 
NFS4 said:
I think it's time for me to buy some NFLX 🙂
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I don't. I completely expect it to go under $60/share over the next month before investors feel it levels off. Worse yet, all it takes is one more piece of bad news (more content being pulled from streaming or by mail, or more new release delays imposed by hollywood) and Netflix goes down even further.

Gotta remember, this is EXACTLY what hollywood wants - to run Netflix into the ground. They won't realize what they actually had until it's gone.
 
IndyColtsFan said:
I mean, even within Netflix's streaming series selection, some of the shows (like A-Team) don't even have all the episodes available via streaming -- you have to get the DVD to see those episodes.
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the most common reason episodes are restricted is due to licensing issues, usually music rights.
third party copyrights where they were allowed to use it originally, but it can't be re-streamed or whatever the term would be
 
FoBoT said:
the most common reason episodes are restricted is due to licensing issues, usually music rights.
third party copyrights where they were allowed to use it originally, but it can't be re-streamed or whatever the term would be
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Yes, and if they got rid of their DVD business, how would they get around that? "Oh, we have the A-team! Well, except for episodes 2 and 13 in season 1, 4 and 14 in season 2....."
 
AstroManLuca said:
I don't doubt that this is in fact the case with many TV shows, but are you certain that there are actually missing episodes? Because I've come across a few TV series where a few episodes are listed as "DVD only," but it turns out those were special features or behind the scenes stuff, and none of the episodes were actually missing.
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100% sure. Unless it has changed very recently, scan through a few of the A-team seasons and you'll see episodes only available on DVD. I even cross-referenced them to IMDB to make sure.
 
BlahBlahYouToo said:
i don't know why everyone is blaming the CEO.
the market and "investors" are a fickle bunch. it's not like he directly controls the share price.
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The price was way too high anyway. People who bought netflix and didn't know it was a price bubble are too retarded to function.

netflix PE ratio is 25.8 right now
IBM has a PE ratio of 15 (better)
General Electric has a PE ratio of 13 (even better!)
 
http://www.reuters.com/article/2011/10/25/idUS119373297520111025
And suddenly investors started looking at corporate fundamentals, and asking questions about whether streaming operations could ever be hugely profitable for Netflix — or even profitable at all. The dynamics of the rising share price were clear: every time that Netflix looked as though it was making lots of money, the price of the next streaming deal would only go up. Netflix has to buy streaming rights from big-media companies, and those companies are going to extract as much money as they can from Netflix, up to and possibly even beyond the point at which it declares bankruptcy. It’s the big-media companies which have the pricing power here, and now that Netflix has set eye-watering precedents for things like DreamWorks Animation and House of Cards, it’s going to find it difficult to pay more reasonable rates going forwards.

So people with equity in Netflix are in a difficult place. Their company is locked into a model where it pays billions of dollars for streaming rights, while keeping the price to subscribers dirt-cheap. That’s a model which on its face looks much more attractive to the content creators than it does to Netflix. And it’s very hard to place a value on the permanent equity of Netflix in that kind of dynamic. When it was going up, it was going up. But now it’s crashed so dramatically, no one has a clue where Netflix stock should be trading, or even whether Netflix — having largely abandoned its DVDs-by-mail business model — even has a viable model at all.
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Netflix is going to expand into the UK and Ireland next year and it's going to push the company into the red in early 2012. So not only can we kiss goodbye the shrink of endless quarters of subscriber growth, but we can also kiss goodbye the long string of profitable quarters.
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...
 
ShawnD1 said:
The price was way too high anyway. People who bought netflix and didn't know it was a price bubble are too retarded to function.

netflix PE ratio is 25.8 right now
IBM has a PE ratio of 15 (better)
General Electric has a PE ratio of 13 (even better!)
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Google Finance has Netflix's P/E at around 18 now. But the problem is guidance for early 2012 is pretty weak. Even if subscriber growth resumes, licensing costs seem to be spiraling fast. Entering the British Isles won't move the growth needle much. They need hordes in the emerging markets to become wealthier with an appetite for licensed streaming video.
 
alfa147x said:
Someone mind putting P/E in layman's terms?
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http://www.dummies.com/how-to/content/valuation-ratios-for-investment-analysis.html
Price to earnings
Price to earnings (P/E) is just what it sounds like: the ratio of a price at a point in time to net earnings in a period, usually the trailing 12 months (TTM). Here's the formula:

Price to earnings (P/E) = stock price / net earnings per share

A high P/E, say 20 or higher, indicates a relatively high valuation; a low P/E, say 15 or less, indicates a relatively low or more conservative one.
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http://www.businessinsider.com/most-shorted-stocks-2011-3?op=1
 
think of it as a barometer is to weather. it doesn't tell you everything, but if the barometer is very low, you can count on stormy weather, if high, good weather, generally

if the P/E is too high, and there aren't really good reasons, the stock is likely to come back down

if the P/E is too low, and there aren't really good reasons, the stock price is likely to rise

if you want to be as good as Warren Buffett, you gotta look at the whole story, not just the barometer (P/E)
 
alfa147x said:
Someone mind putting P/E in layman's terms?
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Rough numbers here (perhaps rough facts too 😛)...

Netflix has earned about $250 million a year ($62m this quarter).

The current price is $77. There are ~52m shares outstanding. Therefore ($77*52m) this is a market capitalization of $4b.

$4b/$250m = 16 P/E

('book value' 4 P/E, $250m/52m?)
 
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