You buy Netflix for this 1 reason
Don't blame Reed Hastings if you lose money on this stock. I have never, ever seen a CEO give a more bright-line admonition than this.
Don't you dare blame Reed Hastings for losing money if you buy Netflix (NFLX) Tuesday.
I have never, ever seen a CEO give a more bright-line admonition than this one: "In calendar year 2003 we were the highest-performing stock on Nasdaq. We had solid results compounded by momentum-investor-fueled euphoria. Some of the euphoria today feels like 2003."
Yes, this may be prelude to an equity offering. But there's something unprecedented here. Execs always want you to buy their stocks. They always think their stocks are cheap. They always think that it's a great time to buy.
But one of the best in the business doesn't. I think this is a note that says "we aren't trading on fundamentals, we are trading on heart, on culture, and, of course, momentum."
This is exactly what happens when you have a stock that goes higher automatically because certain benchmarks are hit that aren't earnings benchmarks. Think of how we value Netflix. Is it by earnings per share? Are you kidding? That means nothing. Is it by revenues per share? Absolutely not. No, it's by subscriber growth and subscriber growth crushed it. So, the decision is binary for many. Better-than-expected subscriber growth? Buy. Slower-than-expected? Sell. It's almost as if the funds that play this game have no choice. If they are short, they have to cover because the only thing they are really betting on is that fewer people signed up.
Now, remember, Netflix is a cult stock. It is one of my Anointed Ones from earlier this year, one that isn't divined by the four walls of the analyst canvas. It's like Amazon (AMZN), Solar City (SCTY) and Tesla (TSLA). Wow. Can you believe Elon Musk has two of them!
That means that if they do an equity offering, it might actually go higher like LinkedIn (LNKD), which did one in the hole and then never looked back. We know that Netflix has expansion plans that need to be funded, as well as continual demands to order new content and to pay for exclusives. We know that international's not easy. On the call, if you can call it that, the company even admitted that it was gamed by Brazilians playing sign-up games.
But we also know after this quarter that Netflix is the de facto worldwide gold standard for home entertainment and at $22 billion that's still -- sorry Reed -- cheap versus the opportunity and the ability to raise prices and negotiate more favorable deals from now on.
Yes, it does feel like 2003. Yes, this has become the ultimate caveat emptor stock. But yes, because of the way momentum investors evaluate stock, this one's good until it's bad, it soars until it crashes. Remember, there are always a couple like this in the stock market, except this one's lasted far longer than most. Now that it is too big to be taken over by almost anyone, as opposed to when I wanted Apple (AAPL) to buy it for $12 billion, you buy the stock for once reason: Because someone will buy it at a higher price than you.
Don't forget that rationale and you will be just fine.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL.
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To change the subject....
We were unable to comment on the self serving Greenspan interview yesterday in which he denied responsibility for not forecasting or acting to prevent the 2008 crash.
A. I seem to recall him testifying before a congress about "bubbles".
B. I have personal knowledge that (some) people selling mortgages at the time understood the jeopardy they were creating. Ditto (some) people selling real estate at the time.
If wrong about A, I apologize. That will never be necessary about B. In which case, wasn't it Greenspan's job to know as well and act on the knowledge.
Can we expect his attitude to function as a template for Helicopter Ben in years to come?
Don't pretend, for a minute that you have not been helping to squeeze the shorts in this stock for 9 straight months! You did the same thing with RIMM and others. Don't forget that you are also hurting retail investors who short , as well. You also drive down stocks to ridiculous levels. You helped drive BBY to below $12 and, now that it is at multi-year highs, you are telling people to buy it. No shame whatsoever! I just want to know what you get out of it. Are you being paid off or do you do it for the sheer joy of having some power to manipulate stocks?
If I knew how to accurately and consistently select stocks without any insider whispering -- with nothing illegal to assist me -- do you think you would ever be reading my thoughts? Do you think you would ever know my name? No, and no again.
While Fox news is reporting news surrounding the website problems CNN is trying to find out who the girl is on the website.......... LMFAO
The USA needs to quit following the old rules for SBA loans........ Loan some money to white men too. It just increases the pool of prospective borrowers and will push up the count on small business. They put people to work.
Save $2,500 per year ?
Won't spend one dime more
Keep your Dr , too !
Keep your plan
No death panels
I was sleeping during Benghazi
Knew nothing about IRS, or AP scandals
We really, really need QE 1-4 and QE 4 ever
The economy is getting better
Yrs, those evil white devils !
so throw a few bucks at it and move on down the road.
they set a standard of entertainment that didn't exist prior. then others step in for competition. price it out like amazon
NEW YORK- U.S. stocks climbed on Tuesday, pushing the S&P 500 to yet another record high, after weaker-than-expected job creation last month reinforced expectations the Federal Reserve will hold the course on its economic stimulus into next year.
The Dow Jones industrial average was up 75.78 points, or 0.49 percent, at 15,467.98. The Standard & Poor's 500 Index was up 10.05 points, or 0.58 percent, at 1,754.71. The Nasdaq Composite Index was up 9.52 points, or 0.24 percent, at 3,929.57.
It's funding our death. No employment connected to it and 100% generated from fake money. Are we really this stupid or this greedy?
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The apparel chain takes a hard hit after blaming the weather for its quarterly sales decline. But cold temperatures don't explain the drop in full-year sales as well.
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