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Strategies & Market Trends : Value Investing
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To: armi who wrote (40318)11/30/2010 12:32:58 PM
From: rllee  Read Replies (1) of 78909
 
NFLX is at a bubble stage and will be a great short when the momentum ends. Here are some of the negatives besides a very high evaluation:

1. They need content (TV shows online) to expand and would have to pay more for it in time

2. The ISP's like Comcast wants to charge them for their customer's high download/streaming usage which they need to pass on to customers or reduce its own profits. This is in today's Wall Street Journal.

3. Even if they charge everyone in the US capable of steaming their products a fee of $10/mo (or whatever the current rate is), it still will not add up to its current evaluation.

4. To expand they need to go overseas but foreign ISP typically block US programs (especially video) from use. To get overseas they have to pay more fees to foreign entities and pass on the costs to foreign customers.

There are probably more negatives but these are the ones that come to mind right now.
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