What are your views on this?
Amazon is expected to offer its video streaming to its prime members. This provides an extra incentive for people to become an Amazon Prime member and purchase their goods with Amazon.
After gathering some opinion from current Netflix users, I have come to an opinion that Netflix users might switch to Amazon Prime as Prime offers more benefits – mainly free shipping!
Furthermore, Netflix is getting boring. Their contents date back to 1980s movies, this explains why Netflix can offer 4X the movie contents than Amazon.
However, it is much more convenient to use Amazon as it allows users to purchase the latest release earlier than Netflix can stream such a video. So if customers want to watch the latest flicks early, the Amazon interface is much better.
I think Amazon is finalizing its video streaming model and I am eagerly waiting to try it out and unsubscribe from Netflix which I feel is great but most of the movies Netflix offers do not interest me.
Netflix has been filled with many drama recently. In December, the CEO openly talk about the foolishness of some fund managers for shorting Netflix. The CEO thinks that Netflix will be able to grab more subscribers and grow its profits fast.
However, looking how companies should be valued, it’s not all about Net income, a better indicator is the Free Cash flow. Netflix chooses to capitalize its operating expenses… that’s why we don’t see the enormous capex lowering its net income. Netflix business model works in such a way that the company purchase licenses from studios and it accounts this as a capital expenditure, and not the cost of goods sold.
As a result, we will only see inflated net incomes and very low Free cash flow.
What this means is that Netflix is making use of accounting tricks to deceive many people. The CEO has been selling shares on a regular basis. Most probably to get as much money from the hyped up rally.
Why are investors buying netflix? It sees great growth for Netflix. However, movie studios are not giving up, they are raising cost of licenses too. Netflix has licenses that will expire soon, and this will affect its future net income when it realizes the write downs of its intangibles.
Netflix CFO has already resigned. This is a terrible sign for a company. What’s more. Coinstar’s redbox has offered guidance that the DVD rental company is going to suffer from less subscription, while Netflix CEO refuses to offer long term guidance.
This is because Netflix faces a lot of trouble in time to come. Amazon Prime’s video streaming is a pain for Netflix, plus Amazon owns lovefilm.com which impedes Netflix’s attempt to expand in Europe.
Amazon, being one of the largest cloud players is able to operate at a lower cost than Netflix in terms of streaming.
There’s many signs that Netflix is going to fail. Puts activities are increasing at an enormous rate. Recently, the MMs have pumped Netflix to $221, and FEB Puts for $210 has declined to almost nothing. Many hedgefunds have grabbed those options and they will reap crazy gains should Netflix fall below $210 and there’s many evidence that suggest that it might.
Firstly, the stock market is going to be facing a steep correction given the unclear economic outlook from the bleak job report, and the turmoil in Egypt. We are not clear what’s going on in Europe either. Merkel keeps trying to stabilize the Euro for the sake of Germany’s future.
I am a firm believer that Netflix is doomed to fall really soon. I empathize with the poor fund managers who have been shorting Netflix since $110. This reminds me of John Paulson who was crying in 2006 when he first started to short the housing market and has overdrawn his position for 1.5 years as the market went against him.
-What do you think of netflix?
Are you long at $220 or short? What do you think tolits?
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