Geez, is Netflix ever going to take a break? How high can this stock go before it’s over-valued?
If I had started buying this stock when I first started using their DVD mail service in 2004 I would probably be a Millionaire by now 
This stock has been OVER it’s 50DMA (Day Moving Avg) since before 2009! Unbelievable.
There has been STEADY growth for the last 6 years! Not many stocks can say that (like VERY few!).
What’s their secret?
So would I buy this stock if I had an extra $10000 laying around?
The upside potential seems to be unlimited for Netflix but how many more customers can they sell their streaming services to? According A.C. Nielsen Co., there are about 115 MILLION TVs in the US and the average household has 2.24 TVs, 66 percent of US homes have more than THREE TVs! The average US home watches TV for nearly 7 hours a day…
- Number of hours of TV watched annually by Americans: 250 billion
- Value of that time assuming an average wage of S5/hour: S1.25 trillion
- Percentage of Americans who pay for cable TV: 56
- Number of videos rented daily in the U.S.: 6 million
Netflix has about 23 million customers in the US and Canada.
That leaves nearly 100 million potential clients not to mention the
6 million videos rented EVERY DAY * 350 days =2,100,000,000
That’s over 2 BILLION rentals every year (rounded)…
So Netflix has a potential revenue of $2 billion and with their $8/month cost = a potential total net revenue of $16billion per year!
Revenue has been steadily growing in the last 4 years at about a 25% rate, book value has gone up and down but not bad – about $275Million currently
So is $290 / share too much to pay?
There are not many companies with the fundamentals that Netflix exhibits and none are growing at the same rate.
The HYPE: China and Europe may be their next streaming media targets opening up completely new clients for them.
- The mainly Chinese ADSL connection's capability is not more than 2mbps.For a normal family, it may be only 1mbps. That’s pretty slow…
- In China,people can easily get the latest movies from Internet for free or else buy a high quality DVD very cheap as many of them don't pay for the copyright.
This may change eventually but for now most people will choose free over Netflix. - There are other movie rental/downloading options that the Chinese people are already using that are cheaper than Netflix so why would people change unless the government changed the rules but I doubt that would have much net effect.
Europe also has very slow connections and adoption will be an uphill slope – most people around the world do not
Amazon may have beat Netflix to the punch however:
“Amazon.com has agreed to buy out its remaining interest in LoveFilm, the European equivalent of movie rental service NetFlix”
In addition to allowing customers to rent DVDs and games via postal mail, LoveFilm has a growing streaming video service. The company, which operates in the UK, German, Sweden, Norway and Denmark, offers monthly service from £4.99 to £15.99 per month.
This does not bode well for Netflix storming the beaches of Europe…
Still with all that said if I had the money I would definitely buy Netflix and then wait for the first time it dropped below it’s 50DMA to watch it for a selling opportunity.
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