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davejh23 (< 20)

What's going on with Netflix?

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September 19, 2011 – Comments (0) | RELATED TICKERS: NFLX

First, they announce price increases that tick off a ton of long-time customers.  Many vowed to cancel their services, and it appears that they followed through.  Now, the CEO comes out and says "Oops, we handled that badly...but now we're going to split our DVD and streaming businesses."  Even if the idea of the split makes sense from a business standpoint, why the name change?  Why make it more difficult for potential customers that want to register for both services?  With rapidly increasing competition, many users have complained that Netflix's service already isn't best in class.  Has their subscriber base peaked?  Can they say goodbye to the rapid growth that many predicted would continue for years to come?  If so, then they can say goodbye to their sky high P/E multiple.  The stock rose significantly this morning, but is currently down 7%+ from this morning's high.  If they can't figure out how to start growing their business again, and rapidly, this stock could easily have 50%+ downside from here.

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