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

[IceBergSLiM]

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?)

In summary a lower PE is better for investors looking to buy.

 

[Miramonti]

In summary a lower PE is better for investors looking to buy.

Yep, closer to book value the better, indicating less speculative premium. Some companies have infrastructure that is heavily valued, or some have intellectual property/patents that each add premium as well.

 

[IceBergSLiM]

Yep, closer to book value the better, indicating less speculative premium. Some companies have infrastructure that is heavily valued, or some have intellectual property/patents that each add premium as well.

i.e. conglomerates/blue chips

 

[BlahBlahYouToo]

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!)

is the inflated value of NFLX stock the fault of the CEO?

 

[Imp]

In summary a lower PE is better for investors looking to buy.

True... But you have to ask yourself "why" it is that low.

Look at RIM, their P/E is about 5 right now, and they're raking in billions, still making a huge profit. But everyone thinks they'll be dead within the next few years. If you don't think so, then it's a great value buy.

NFLX P/E was like 80 when the price was $300. Amazon is stupidly high too at 100, but they actually have a chance of taking over the world.

 

[dwell]

True... But you have to ask yourself "why" it is that low.

Look at RIM, their P/E is about 5 right now, and they're raking in billions, still making a huge profit. But everyone thinks they'll be dead within the next few years. If you don't think so, then it's a great value buy.

NFLX P/E was like 80 when the price was $300. Amazon is stupidly high too at 100, but they actually have a chance of taking over the world.

Amazon's earnings just came out. Net income down 73%, net sales up 44%. Already down 14% in after-hours trading.

 

[goog40]

True... But you have to ask yourself "why" it is that low.

Look at RIM, their P/E is about 5 right now, and they're raking in billions, still making a huge profit. But everyone thinks they'll be dead within the next few years. If you don't think so, then it's a great value buy.

NFLX P/E was like 80 when the price was $300. Amazon is stupidly high too at 100, but they actually have a chance of taking over the world.

Add LNKD to the list of stupidly overpriced stocks. AMZN down 43 points on the day after missing earnings.

 

[Miramonti]

True... But you have to ask yourself "why" it is that low.

Look at RIM, their P/E is about 5 right now, and they're raking in billions, still making a huge profit. But everyone thinks they'll be dead within the next few years. If you don't think so, then it's a great value buy.

NFLX P/E was like 80 when the price was $300. Amazon is stupidly high too at 100, but they actually have a chance of taking over the world.

You're making excuses for a 100 PE company that has incredibly small margins. 100 PE for Amazon is just absolutely stupid imo.

People get conflicted tho...there are two types of investments...those based on fundamentals, and those based on where they think the next price of the stock is going to be, up or down. Buffett sticks to fundamentals, and often in the process loses many battles in the short term, but because fundamentally he's always supported, he wins many wars (albeit not all of them of course.) That's not to say there isn't profit to be had basing a position on where the price will be next tho (short term.)

 

[JTsyo]

Add LNKD to the list of stupidly overpriced stocks. AMZN down 43 points on the day after missing earnings.

Might be a good time to get in since you know holiday sales are going to be huge but of course the question is will it be better than expectations.

 

[Miramonti]

Amazon's earnings just came out. Net income down 73%, net sales up 44%. Already down 14% in after-hours trading.

LOL what timing.

 

[dwell]

Might be a good time to get in since you know holiday sales are going to be huge but of course the question is will it be better than expectations.

The Kindle Fire is going to be hot (lol). Seriously though, will be a killer seller.

 

[Miramonti]

is the inflated value of NFLX stock the fault of the CEO?

Definitely not, but it was his fault to be so arrogant to think his company was actually that strong and worth that much imo. He's getting b!tch slapped for that because of irate shareholders, which is really not his fault.

The company instead probably should have been a $50 stock that sold off to $35 or so instead, after such a stupid decision. But if it was only $50, he wouldn't have put thru a 60% price increase either.

 

[manly]

Definitely not, but it was his fault to be so arrogant to think his company was actually that strong and worth that much imo. He's getting b!tch slapped for that because of irate shareholders, which is really not his fault.

The company instead probably should have been a $50 stock that sold off to $35 or so instead, after such a stupid decision. But if it was only $50, he wouldn't have put thru a 60% price increase either.

I think the referenced Seeking Alpha article stated that yesterday's release mentioned they had bought back shares in the past, but won't be able to do so going forward. Not saying Hasting's head is on the block but if management bought back bubbly shares within the past 12 months, that is a fireable offense.

Re: Amazon, they've been valued as a "cloud" company in recent quarters.

 

[Doppel]

30 PE is fine with well above average industry growth. And that's why it is still as high as it is. However, if the company's growth drops or, *gasp* it stops making money for a while, then the top can come off that damn fast, as we've seen!

That reuters article brings up a good but somewhat obvious point. Nobody knows the value of netflix because the market is really new (streaming), and we have no idea how much room for growth it has. Any? lots, maybe only some?

 

[angry hampster]

The Kindle Fire is going to be hot (lol). Seriously though, will be a killer seller.

It will be a loss leader. I doubt they will make money on Fire sales, but it will lead to Amazon App Store sales.

 

[Imp]

You're making excuses for a 100 PE company that has incredibly small margins. 100 PE for Amazon is just absolutely stupid imo.

People get conflicted tho...there are two types of investments...those based on fundamentals, and those based on where they think the next price of the stock is going to be, up or down. Buffett sticks to fundamentals, and often in the process loses many battles in the short term, but because fundamentally he's always supported, he wins many wars (albeit not all of them of course.) That's not to say there isn't profit to be had basing a position on where the price will be next tho (short term.)

Wasn't really trying to defend Amazon, just alluding to the fact that they have a 'si hueg' distribution train and boots on the ground; whereas, NFLX has a website, some software, DVD distribution and <feel free to add>. One should be harder than the other to displace.

Amazon also killed revenue by funding Kindle stuff, which apparently isn't suppose to make them a lot of money directly, but should (emphasis) be successful in promoting their brand and peddle shit.

Regardless, 100 P/E is stupid. I haven't and will never touch AMZN stock with a 100' pole.

 

[Miramonti]

Wasn't really trying to defend Amazon, just alluding to the fact that they have a 'si hueg' distribution train and boots on the ground; whereas, NFLX has a website, some software, DVD distribution and <feel free to add>. One should be harder than the other to displace.

Amazon also killed revenue by funding Kindle stuff, which apparently isn't suppose to make them a lot of money directly, but should (emphasis) be successful in promoting their brand and peddle shit.

Regardless, 100 P/E is stupid. I haven't and will never touch AMZN stock with a 100' pole.

:thumbsup:

 

[gophins72]

Amazon's earnings just came out. Net income down 73%, net sales up 44%. Already down 14% in after-hours trading.

Sales up 44% but income down 73%? as an investor i'd say that is a disaster! but as a non-investor, i'll just say "Whoa"..... Hope this kindle pays off for them.

 

[bfdd]

still supporting netflix here.

 

[zinfamous]

The Kindle Fire is going to be hot (lol). Seriously though, will be a killer seller.

this

 

[zinfamous]

It will be a loss leader. I doubt they will make money on Fire sales, but it will lead to Amazon App Store sales.

yes, but how long are they projected to make losses on the sales? two quarters, maybe? longer?

 

[jpeyton]

yes, but how long are they projected to make losses on the sales? two quarters, maybe? longer?

http://techcrunch.com/2011/10/25/why-did-amazon-profits-take-a-hit/

Amazon is ramping up investments in the backend infrastructure to support all the digital media it expects people will want to consume on their Kindles, especially their Kindle Fires. It is spending a lot of money on both technology and content. Amazon spent $769 million on &#8220;technology and content&#8221; in the quarter, up 74 percent from a year ago. And it invested nearly $1.6 billion on &#8220;fixed assets, including internal use software and website development,&#8221; which is double the amount it spent a year ago, according to one of its investor slides.

In other words, it is investing for the future, and intends to keep on doing so. &#8220;In terms of content, we will be purchasing content for both our U.S. business, for both our paid and unpaid (Prime) business in Q4,&#8221; says Szkutak. Amazon will need to pay out a lot more in streaming licensing fees to the Hollywood studios if it wants to catch up to Netflix and Hulu. And with the Kindle Fire, it expects to have a built-in audience of millions of people for streaming movies. It needs to license that content before those consumers can watch it.

 

[zinfamous]

Interesting. seems like a pile of money invested, but what do I know? the earning report looks a bit startling, and I suppose hurts any opportunity to pick up Netflix. it seemed--yesterday, anyway--that an opportunity to purchase Netflix would be a killer deal just ahead of releasing the Fire.

...sounds like they won't be able to swing that, now? :\

 

[manly]

yes, but how long are they projected to make losses on the sales? two quarters, maybe? longer?

if you're referring to the rumored $10 loss on each Kindle Fire, they should be able to break even on gross margin within one quarter.

Interesting. seems like a pile of money invested, but what do I know? the earning report looks a bit startling, and I suppose hurts any opportunity to pick up Netflix. it seemed--yesterday, anyway--that an opportunity to purchase Netflix would be a killer deal just ahead of releasing the Fire.

...sounds like they won't be able to swing that, now? :\

Amazon has always spent heavily on engineering and clearly invested heavily in EC2 in the past year. It's kinda funny everybody is blaming Kindle Fire, which hasn't shipped so wasn't a drag on profit margin in Q3. The existing K3 maybe, but it appears more likely they've just been pouring a lot of money in cloud infrastructure and human capital. Amazon has always operated more like a Silicon Valley tech firm than a stodgy retailer.

Why can't Amazon still purchase Netflix if they wanted to? Their valuation has dipped, while NFLX has totally cratered. I think the math still works in Amazon's favor. 😉

 

[Dari]

Netflix was doing everything right for years. I guess they got tired of their winning streak and decided to fuck with things. They then proceeded to fuck with the UI. They fucked with the price. Then they fucked with their bread-n-butter: DVDs. I attribute it to either boredom or to a CEO who thinks he can do no wrong. Afterall, he talked Hollywood into all these streaming deals for pennies on the dollar. But now, with all this backlash and the 900&#37;-9000% increase in cost for streaming that Hollywood is about to renegotiate on these contracts, Netflix is turning its winning streak into a losing streak. IMHO, their new contract will be the standard so I don't see them having any advantages over other streaming companies. I see their stock falling further in the next year. Their golden age is over.