Is Netflix's incredible run over?
The company has been on an absolute tear and is now easily profitable as well.
By Eric Dutram
In late 2011 and 2012, Netflix (NFLX) faced some dark days. The company's stock price was floundering, and there were many questions about its expansion strategy and content costs.
Lately, however, Netflix has been on an absolute tear and is now easily profitable as well. In fact, the company is currently expected to earn $1.52 a share for the current year, a growth rate of over 420% from the previous year. Plus, Netflix has seen its share price surge by over 250% in the first nine months of the year, making it a star performer as well.
Yet despite this incredible run, some cracks are starting to appear in the Netflix story. The current forward price-to-earnings ratio is above 200, while the stock has just a Zacks Rank No. 3 ("hold"), and its Zacks Recommendation was recently downgraded to "neutral." Netflix has also lost about $30 from its share price in the last five days, including a 5% slump in Tuesday trading alone.
This recent tumble could suggest that the last new high in Netflix was the top for quite some time, and that some more poor trading could be ahead for the company. After all, we have been here before with Netflix, as the company saw a huge surge in early 2011, only to slump more than 70% in the final half of 2011. Could history be ready to repeat itself here?
But thanks to soaring revenues and a healthy expansion plan in international markets, NFLX could still have room to run. This could be especially true if the current slate of original content -- which includes the fantastic program and Emmy-winner "House of Cards" -- continues to convince cable-weary consumers that Netflix is an amazing deal at $8 a month for unlimited streaming (or one-DVD-at-a-time for the same price).
NETFLIX (NFLX): Free Stock Analysis Report (email required)
More from Top Stocks
This is a totally empty article: there's no evidence at all about anything foretelling Netflix's doom.
It's by far the very best $8 a month anyone possibly spend for thousands of watchable items, and some great original things like House of Cards.
Please don't waste our space and time with meaningless articles like this one.
Frustrated Gwen in Seattle,
Rub a little peanut butter on it and it will be O.K....Netflix rocks....love the fact that they post the full season. Sorry you don't. In the big scheme of things, it beats the cable bill to death.
$8 a month for commercial free TV / movie viewing?
Priceless, if you ask me!! I haven't watched a single program on regular satellite or cable since Netflix came into my life.
I turned off my cable when it started to get near the hundred dollar range (with internet) since I think most of the programing sucks on TV anyway - I invested in an Indoor HDTV Antenna (Made in the USA) which picks up my local channels for free! - and that's really all I need.
I still occasionally download from both ITunes and order from Netflix (to receive something other than bills in the mail).
I enjoy NETFLIX home DVDs. Love watching many of my favorite TV shows COMMERCIAL FREE and whenever I have the time. 1 hour shows are barely 40 minutes long, great for catching a couple of
episodes in short order! Really nice for watching a season of episodes develop the storyline.
I pity you fools who still hang on to "the cable", suffering through the monthly rate increases and nearly 20 minutes of commercials per hour to watch the same as I do!
The same big babies that started the crack (the new competition) by crying about how Netflix was getting better deals for movies. Are going to have the same cracks. So Netflix in hindsight will not be cracked.
Copyright © 2014 Microsoft. All rights reserved.
These hot movers could rise by double digits in coming months.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.