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$31.66 1.73 (5.78%)
5/16/2008 4:00 PM

Netflix, Inc. (NFLX)

CAPS Rating:
***

The Company is a online movie rental subscriber which provides more than 6,300,000 subscribers access to a comprehensive library of more than 70,000 movie, television and other filmed entertainment titles on DVD.

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21

Avatar travels68 (38.15) Submitted: 12/25/07 6:01 PM : Outperform Start Price: $24.19 NFLX Score: 25.09

The bear argument that VOD and cable/fiber based on demand services are going to kill Netflix is a non-starter.

I'm a professional network engineer, have been for well over 10 years, and the bottom line is that the quality of the video experience delivered via physical media will continue to outperform the capacity of networked video delivery. As network capacity grows so too will the latest video and audio capabilities of physical the media on which films are delivered, keeping it a step ahead of the VOD experience.

Add to all of this the lead that Netflix has with it's online community, recommendations engine, and VOD service and I don't see a short or medium term catalyst to the downside.

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Avatar JoeTMerchant (30.79) Submitted: 1/31/08 4:36 PM

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VOD is here, and with the next bump in bandwidth to the home, will exceed DVD quality.

Question is, when is that next bump in bandwidth to the home coming - I'm guessing it will take 5-10 years to roll out, and that's plenty of time for Netflix to get brand traction and subscriber loyalty built up.

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Avatar willsmithorg (84.81) Submitted: 1/31/08 6:20 PM

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I agree with both of you - network is too slow. And DVD quality is dead, the hi-def war has just been won by Blu-ray and we should see rapid takeup of hi-def this year. People already have the expensive part - the big TV, and the hi-def players have fallen from around $1000 in 2006 to $250 in late 2007. Most people have held back because nobody knew who would win.

My other reason to be bullish on all the home-movie stocks (NFLX, with Blockbusters and Apple as a hedge) is that in a recession people still need entertainment, they just need cheaper entertainment. So cancel your expensive meals out, and trips to the movies, even cancel your cable, and just rent a few cheap movies at home.

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Avatar iantalbot (< 20) Submitted: 1/31/08 10:05 PM

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I think it has a strong lead position in this industry. Long term it will outperform the market. However there are enough shorts that the stock has some wide (profitable) swings. Buy on weakness and sell in the high $20's.

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Avatar sparkimus (83.55) Submitted: 4/21/08 3:14 PM

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MP3 format doesn't match the quality of records and cd's, but MP3 players hurt the cd retailers tremendously.

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Avatar lepant (96.99) Submitted: 4/25/08 2:53 PM

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This has nothing to do with Netflix but oh well; as far as MP3 players hurting cd retailers that is hardly the case the reason cd retailers were hurt is because of the fact people were and for that are downloading music from p2p networks without paying anything.

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