Remember RIMM introduction of BLACKDEATH, NETFLIX might be next. $RIMM, $NFLX

Last year, I was bearish on RIMM when the stock was trading at $60. The Blackberry Torch ignited a rally to $70 as investors continue to pour money into RIMM. The result speaks for itself as RIMM struggles to hold $35 now.

Similarly, I was and am still bearish on NFLX. 2 successful short play paid off previously when NFLX was trading at $200 and fell to $180, and the other time when NFLX was trading at $225 and fell to $190.
But when NFLX started to climb again, I stopped trying to be a contrarian. I let NFLX rise to its current level of $265 and I won't short the stock just yet. However, I would like to warn investors of the upcoming NETDOOM which is similar to BLACKDEATH.




Netflix is a wonderful company. It innovated the rise of unlimited movie and video streaming. However, Netflix is not a cash cow. It continually uses the profits that it makes to fund license purchases from the Movie giants.

Netflix is not a consumer monopoly despite what WallStreet wants us to believe. Amazon has failed to compete with Netflix, but that does not mean it is stopping just yet. Netflix video streaming service is not a differentiated product, it is more like a commodity though with a significantly high barriers to entry due to the low free cash flow.

It is important to note that a business that makes a lot of money but yet uses most of the easy-earned money for capital expenditure is not a good business in the long run.

Netflix valuation is off the stars if there's such a phrase. It is understandable that WallStreet is incorporating Netflix's extraordinary growth into the stock, however, WallStreet hides the fact that Netflix's operating cost might rise as fast too. Firstly, Netflix is eating too much bandwidth and it is currently causing a massive negative externality which imposes a huge burden on communication companies. Next, Netflix is not welcome by movie theatres which are threatening to the movie giants. This means more expensive licenses and bad terms.

Just as Blackberry failed to differentiate itself and fell victim to the wave of SMARTPHONES, Netflix is facing its impending doom as it will fail to differentiate itself just soon. Wait for YOUTUBE to release its Netflix like video streaming, or Amazon or even APPLE who is trying so hard to grow with iCLOUD and weird stuffs.

Netflix is a big short, but be careful as crazy tech investors who are pumping tech companies like LINKEDIN, Facebook are doing their best to kill short sellers. I think Netflix might even hit $300 before its doom.