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rffrydr
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 Posted: Sun Aug 21, 2011 11:18 am Post subject: |
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Just checking Netflix new movies on offer--and boy are they stinkers. They're getting cut off.
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HenryTo
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| Posted: Wed Jul 13, 2011 4:46 pm Post subject: |
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Morningstar on NFLX's price increase:
| Quote: | | Netflix NFLX announced a major change to its pricing plans Monday--essentially a price increase for subscribers taking both DVDs and streaming video. We still maintain the shares are overvalued, trading at more than 55 times our 2012 earnings per share estimate. The new $8 monthly price for one DVD at a time or for unlimited streaming will force customers to reassess their plans, now that a discounted bundle is not available. We viewed the $10 price for both DVDs and streaming as a great value for customers but an unsustainable price point, given the heavy increase in content costs for licensing streaming content. The new pricing goes into effect immediately for new customers and resets for current customers on Sept. 1. We expect management to provide some additio nal insight after the earnings release July 25. We think the price increase was inevitable, although we were a bit surprised that some sort of bundling package is not available. Customers like streaming video, but given the limited titles, having the option for DVDs presents a much fuller menu. To get one DVD at a time and streaming will cost $16, a 60% increase from the prior $10 price point. We have limited details about the allocation of customers into the different buckets, but we assume a majority of customers were on a bundled plan with one DVD. Earlier this year Netflix stated that about 90% of its subscribers were receiving streaming only, one DVD, or two DVDs per month. We plan to tweak our subscriber estimates and average revenue per user based on this pricing change, but our initial view is that customer defections can be offset by the price increase. While Netflix is taking a risk that fewer people take the $16 plan, we believe another possible motivation for man agement is to segregate its streaming-only customers if and when its content partners ask to be paid on a per subscriber basis. |
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rffrydr
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| Posted: Tue Jun 28, 2011 8:54 pm Post subject: |
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CEO says Netflix is the NBA to Cable's NFL--nothing to do with one another yet mutually reinforcing.
Only 19th ranked best performer in 1st half.
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rffrydr
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rffrydr
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| Posted: Sun May 29, 2011 7:16 am Post subject: |
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Its business model is already changing. Netflix is becoming a victim of it own success. Hollywood is apoplectic with envy and is withdrawing content at any price ergo Warner. Netflix responds with its own programming. That's not gonna cut it. It's never gonna be able to offer up the celebs on a true and constant basis let alone the whole Hollywood machinery that can get me out to a theatre to see four(!) of the same tired pirate movie!
The incredible bandwidth stat will keep them afloat for now but, the heart of the matter, they really don't have that much content to stream. If they hadn't added the complete "Top Gear" I'd be down to netflix once a week by now.
I will say they have the best buffering tech for marginal signals of any vid over the net. That makes all the difference in that demographic. I have no idea how long that edge will be maintained. And that tvs now have their app built in is a huge advantage. TV remains a social activity--and watching it on a computer screen alone is not the way of the future.
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nodoodahs
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| Posted: Sat May 28, 2011 2:50 pm Post subject: |
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This is non-specific to NFLX, it just applies to the general class of high-fliers trading at this type of valuation ...
(1) Putting on a general short position is a long-term loser for these stocks.
(2) Using a 1/4-sized short position on a portfolio of these stocks, when counterbalanced by a 4/4-sized position in a portfolio of value stocks, really tests out pretty well. Although the short side loses money, the total portfolio does better in volatility-adjusted-terms than just the value portfolio would.
(3) If you confine the short position in stocks like these to downturns in the general stock market, then it's a very profitable tool. You could do this with a MA technique on the SPY, or use the projected placement of a chandelier stop-loss on the high-fliers as the entry point for a short play.
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HenryTo
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| Posted: Sat May 28, 2011 12:38 pm Post subject: |
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Time to update my 23-page investment memo on NFLX. Should've listened to my own BS last summer when the stock traded at $110 a share. NFLX at today's price of $264.51 is probably overvalued, but could this be a good short? Answer: Only if NFLX's business model becomes obsolete--and there are still no signs of that occurring (although I may change my tune after more research). The more important question is: Why short NFLX (or LNKD for that matter) when there are so many fraudulent Chinese stocks to short? Following is Morningstar's April 26, 2011 commentary on NFLX.
| Quote: | The transition to digital delivery levels the playing field for Netflix’s competitors.
We were not surprised by Netflix's NFLX impressive first-quarter results, given the company's recent momentum and its substantial head start in attracting new customers for its streaming video service. However, we continue to believe that the market is projecting current growth too far into the future, without considering the impact of accelerating programming costs and looming competition from larger, well-capitalized competitors. We're sticking with our fair value estimate.
It is hard to call the results anything less than impressive, with 3.6 million net subscriber additions, which lifted the quarter-end count to 23.6 million. Sales improved 46% to $719 million, driven by a 61% increase in paid subscribers offset by a 7% decline in average revenuer per sub to $12 per month. The lower ARPU is the result of more new customers taking the $8 streaming-only service.
We are not surprised that the quarterly operating margin improved to 16% from 12% as management hinted at higher near-term margins in the February earnings call, given the lack of large content deals in the period. However, we still expect margin pressure in the long run, as our view is that the company does not have a sustainable competitive advantage in procuring quality content. Therefore, to satisfy its current customers and attract each incremental customer, Netflix will have to spend more on both current and higher-quality content. While financial terms for its licensed content are not publicly disclosed, some of the reported costs for the older library content lead us to believe that Netflix will have to pay substantially more in the future.
Netflix shares have had a great run, but with the stock currently trading at more than 50 times our estimate of 2011 earnings per share, we think the market is overlooking some of the long-term challenges facing the firm. |
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HenryTo
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| Posted: Tue Mar 08, 2011 11:20 am Post subject: |
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Another distribution channel to compete with NFLX:
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Warner Bros to offer movies through Facebook
On Tuesday March 8, 2011, 11:57 am
SAN FRANCISCO (Reuters) - Warner Bros Digital Distribution said it would make some of its films available on Facebook, opening up a new source of revenue for the Internet social network and marking new competition for online entertainment companies.
Consumers can pay for the movies using Facebook Credits, Warner Bros said on Tuesday. Until now, the virtual currency developed by Facebook has been primarily used in the social games that are popular on the site.
The first movie available on the Warner Bros Entertainment page on Facebook's site is "The Dark Knight," which consumers can rent for 30 Facebook Credits, or $3.
Shares of online rental service Netflix Inc were down 4.4 percent at $198.38 in midday trading on Tuesday. |
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rffrydr
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rffrydr
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| Posted: Tue Feb 15, 2011 12:17 pm Post subject: |
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Dot (bomb) echo? I use netflix streaming as alternative to cable and though I am quite happy with it every time you do your selections you are reminded how much you do NOT have. I don't see the push to streaming holding new accounts unless this gets amped up in a hurry. And there is no excuse for not having the bulk of entombed classics up for a stream. Right now they are the only game in town. And maybe that's enough. But with cable opening up to multi-platform streaming I don't think 54X '11 earnings is gonna do it. Surprise Hussman still holds it. Still won't short it. It's sort of comforting to have one of these tagging along on the bulls tail:
http://online.wsj.com/article/SB10001424052748704409004576146253209440660.html?mod=WSJ_newsreel_markets
| Quote: | | Investors may want to follow the lead of Netflix CEO Reed Hastings, who has reduced his stake by a third since 2008 as the stock has soared. Now trading at 54 times 2011 earnings, Netflix is arguably the most obvious symbol of the latest dot-com boom. At recent price levels, even the bulls must be wondering how long it can defy gravity. |
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rffrydr
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| Posted: Sat Oct 23, 2010 6:30 am Post subject: |
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"On Demand" has turned into a good outlet for independent fare....ironically.
NetFlix makes it happen. Still wish they'd let you buffer the whole thing.
| Quote: |
DVD’s farewell
Published: October 22 2010 22:35 | Last updated: October 22 2010 22:35 |
The DVD is not yet dead, but this week Netflix declared the disk’s condition terminal, and Apple turned off the heart monitor.
| Quote: | Netflix announced on Wednesday that the company has become a video streaming service that also happens to rent DVDs by mail. By next quarter the group anticipates the majority of its content will be beamed direct to TVs over the internet, rather than watched on DVD. Meanwhile Apple – which sells one-in-five consumer PCs in the US – unveiled its view of the future for laptops. Within the sleek aluminium frame of its new Macbooks there is no room for a spinning disk drive. Instead the machines’ operating system comes loaded on a USB stick, with software to be dowloaded through an app store.
DVDs will linger on for a while. There is still a (shrinking) market for music CDs, after all, and Sony has invested too much to win its pyrrhic victory in the format wars with Blu-Ray to abandon physical disks just yet. The battle for consumer attention has moved on though, and as with other changes in product distribution seems likely to shrink the profits available.
Indeed, Netflix faces a challenging future. The company dominates the US DVD-by-post market, its early lead giving it a cost advantage as subscriber numbers rose rapidly. But online it faces competition for rentals from aggressive competitors such as Amazon and Apple’s iTunes.
More crucially, Netflix must buy films and programming from media companies enjoying a profitable staus quo, with little reason to encourage disruption of the existing system of cable and satellite TV distribution by supplying Netflix cheaply. Analysts still forecast sales roaring upwards in the years ahead, but profitability is expected to plateau soon. With the stock valued at over 50 times prospective earnings, investors may be dancing prematurely on DVD’s grave. |
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nodoodahs
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| Posted: Fri Sep 24, 2010 12:16 pm Post subject: |
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Some of us can still drive to blockbuster faster than downloading a movie - but the blockbuster might be closed!
If I watched many new releases I might be interested in downloading, but I'll let them go to cable (now satellite) first. Been a long time since I rented a movie. Can also do "on demand" of the satellite, which competes with Netflix.
Except maybe RE IV with Milla and Ali ... in 3D ... might see that in the theaters.
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rffrydr
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| Posted: Fri Sep 24, 2010 11:57 am Post subject: |
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Well on its way to becoming a Brand.
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rffrydr
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| Posted: Wed Sep 08, 2010 2:18 pm Post subject: |
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They all laughed at Netflix. We we're going to download our movies straight to the set, remember? 
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HenryTo
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