I am looking at a bearish NETFLIX trade with extreme caution.
Netflix failed to go up on one of the most bullish days. The stock corrected downwards. I took a small short position at $205 today, and have set my stop loss at $201.50
I see it going to at least $190.
The reason to be careful is because Fund Managers are usually 40 years old and they don’t understand anything about NETFLIX. They think this is the best company in the world and they are buying Netflix at more than 10X the company’s real worth.
The stock continues to rise due to irrational buying. No doubt the company is good. However do note that margins are squeezed. Netflix recently increased the plan by $1.
Soon comcast wants to charge for video streaming, and this will hurt netflix cost too.
Furthermore, ISPs are coming in to this market. Netflix is not going to enjoy its lone position in the market in the near future. Expect stiff competition from VERIZON, APPLE, COMCAST…
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