Is Netflix's incredible run over?

The company has been on an absolute tear and is now easily profitable as well.

By Zacks.com Oct 9, 2013 5:19PM

Netflix login screen. Paul Sakuma/AP PhotoBy 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).


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Tags: NFLX
141Comments
Oct 9, 2013 8:20PM
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Netflix is by far, better than any of the crap you pay $100.00 a month for.  Go NETFLIX.
Oct 9, 2013 8:43PM
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the stock may faulter, but netflix will continue be everyones first step to lowering their cable bill.
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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.

Oct 9, 2013 8:33PM
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Love Netflix, they start streaming sports. i pay.,. still cheaper than cable with all the taxes
Oct 9, 2013 10:14PM
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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.

Oct 9, 2013 9:51PM
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I enjoy Netflix I would enjoy it even more if there were more up to date movies offered and yes it is cheaper than any cable.
Oct 9, 2013 8:43PM
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So the article states Netflix reached new heights before plummeting in 2011 and could again but on the other hand much higher revenue now means they could soar again. Glad they cleared that up. Whatever the stock price ends up at it's the best $7.99 a month or whatever current charge is I could spend.
Oct 9, 2013 8:57PM
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Netflix beats all other similar companies.  I return a disc on monday, and get a new one on tuesday, and occasionaly, wednesday.  GO NETFLIX.
Oct 9, 2013 11:20PM
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I only pay like $8 a month for just the streaming and I use Netflix quite often. It's a great service and worth every penny.
Oct 9, 2013 10:47PM
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Canceled my cable 3 yrs ago and been having Netflix ever since!! Thanks to the roku, I get crackle, popcorn flix, etc. for free!!
Oct 9, 2013 10:55PM
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Blah blah blah...MSN is running another anti-Netflix story that they once again pulled from their ****...Someone there is still butt hurt that they took Dora off of streaming...
Oct 10, 2013 2:24AM
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lets see unlimited streaming via netflix's service for $7.99 a month with no ads yet hulu plus u still sit through ads some that can last 120 seconds for the same price and same content just about ?

netflix it is then!!!

Oct 10, 2013 12:47AM
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No one can match Netflix prices and streaming capabilities.  However, their web site has worsened.  They don't get as many new releases as they used to as far as the mail deliveries, and they make it very difficult because they don't list all of their new releases as they used to.  They make you shuffle through what they call "popular new releases."  This is frustrating as I like to watch unique movies and documentaries that aren't "popular."  I end up having to search other sites to see what to search for on Netflix.  They need to list all new releases as they used to.


Oct 10, 2013 7:53AM
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$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.

Oct 10, 2013 7:47AM
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Another day, another anti-Netflix story from MSN Money. Netflix should give serious thought to suing MSN Money for slander. This isn't reporting; it's a biased agenda.
Oct 9, 2013 11:09PM
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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).

 

Oct 10, 2013 1:27AM
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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!

Oct 10, 2013 4:41AM
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I would die without Netflix!  Whachoo talkin' bout Eric??
Oct 10, 2013 7:32AM
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Don't take away my Netflix! Although I DO wish they would add more disc stuff to streaming, and put all of a show on instead of only part of it. 
Oct 10, 2013 1:51AM
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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. 

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