NFLX Netflix: Bearish short term NFLX

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	Wesley To
	Mill Creek, WA User since Jul 2011	64
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Bearish short term NFLX

Netflix has been banking on new subscriptions as their increase in revenue. I believe they had to make a decision as they were not making the numbers they expected. The U.S. subscription additions have most likely slowed so they are attempting to move international.

I don't believe they have the cash to go international and need a quick boost in revenue to make the play, hence the price increase. I think its a good move as the business model they are banking on is not sustainable. They had to make a decision now to change or go under.

I believe they will show poor numbers on earnings, which will start a downward trend but if moving to streaming and going international plays out, Netflix will be back.

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What People Are Saying...

Josh Warner-Burke said at 7/25/11 4:19 PM Price action was $281.71 5.13 (+1.9%)

This is looking good Wesley. As you know in afterhours earnings release, the shares are off about 6%: Q2 EPS of $1.26 beats by $0.15. Revenue of $788.6M misses by $2.9M.

Sounds to me like another example of lofty expectations meaning a hair trigger for sellers.

Wesley To said at 7/25/11 4:27 PM Price action was $281.53 4.95 (+1.8%)

I think I'm more happy about when I read through the release. It sounds exactly how I pictured it in my head. I also grabbed some LVLT call contracts to see if they got a boost from Netflix gearing towards streaming but I don't see any after hour activity, maybe see something in the next couple weeks. This trade looks good at the moment.

Wesley To said at 7/26/11 10:05 AM Price action was $257.63 -23.90 (-8.5%)

Bummer I closed this out early but the price on this page did not reflect the price (even delayed). It tells me that I made 8.2% on this trade, that would put the underlying stock at $254.41 but when I clicked close it closed me at 256.16 : \

Josh Warner-Burke said at 7/26/11 10:59 AM Price action was $253.64 -27.89 (-9.9%)

An automated process runs behind the scenes to give you as close as possible to the real-time quote from the time you hit close. I know that is a little confusing, but we know most people have access to real time quotes (google finance and marketwatch both have them) so we wanted to prevent any manipulation that could occur if we used a delayed quote only.

Josh Warner-Burke said at 7/27/11 11:07 PM Price action was $269.42 2.51 (+0.9%)

9.4% in 4 days. Great timing.