Netflix, Inc. (NASDAQ:NFLX)
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Netflix delivers its comprehensive library of movies and TV shows online and through the mail in their ubiquitous red envelopes.
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Netflix delivers its comprehensive library of movies and TV shows online and through the mail in their ubiquitous red envelopes.
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For me, this stock is a longer term niche developer. Yes cable is strong, and yes eventually we can all download our own videos. BUT, for a reasonable cost and a wide selection, there will always be a need and wish for a movie rental -- dates and all :)
Although at first flush the P/E appears higher then a value investor would pay for it. I believe that the longer term fundamentals, quality of management, innovation of the teams and lowish churn rate means that these guys are not only going to be around for the longer term, but that they would flourish ;-)
The current concern (I bought this at $9.50 dollars on another set of unjustified concerns) is that Blockbusters will allow its customers to return the DVDs directly to the stores as well as through the postal system. Isn’t that the antithesis of the business model? How will efficiently send the DVD’s onto the next customer? Wouldn’t that mean that they would have to have a wider selection or slower stock turn or both? That would reduce their returns wouldn’t it? For me it also defeats the objective of the postal video rental, as in that case why would you order online in the first place? Food for thought . . .