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Strategies & Market Trends : Value Investing
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To: rllee who wrote (40335)12/1/2010 12:30:48 AM
From: armi  Read Replies (2) of 79000
 
That's what I am thinking too.

Netflix is at such a high valuation that the fundamentals don't add up currently in my opinion. (If I bought it before it started its bull run, maybe it would've been a wonderful investment if I looked back at the results back then (I haven't sorry).)

If you told me to pay 10 billion dollars to buy a company that earns 115 million a year, i'd tell you i'd look elsewhere. It would take over 10 years to recoup my initial investment with the investment growing its net income 10% a year.

Take another example, HSY, The Hershey's company. You would be paying roughly the same to takeover the company but you would earn 400 million after tax.

You can debate Netflix has the potential to grow its earnings more but that's another debate.
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