NFLX – NetFlix Irrational Exuberance

Netflx(NFLX) is a stock that seems to have been on a reality T.V. show the past 6 months. When the stock crossed $300, it had a fight with it's reality mother... Unfortunately reality said, it doesn't deserve its lofty valuation. Not only that, it's Godfather decided to split the online and mail business, and raise prices. The stock dropped faster then a Paris Hilton Calorie Scale.

Now the Reality Script calls for the REBOUND. How does a company with 24.4 million subcribers, with a business model that says we are growing, have stock price that is 60% off it's high from the summer?

Thats an easy answer... it's from the non-believers who have shorted the stock to chit. Who are hell bent on driving the share price under $100. Must be unpleasant to fall asleep at night, knowing those shares you  borrowed at $120, are available at $135. Well not yet, but that is the vision the wicked witch of the west is giving you.

But again that is the lesson you get when you underestimate the power of a company with a huge subscriber base...

 

We shall see what happens the rest of the week, but if history is any indicator of future results, NFLX is primed to head higher into friday.

 

Profile photo of jimmybobJimmyBob (Scott)has been trading equities for over 15 years, a majority of which were OTC micro-cap stocks. He started trading high risk stock options over the past 7 years, and has proven winning trades in excess of 15,000%.

As one of the Co-Founders of optionmillionaires.com, Scott enjoys sharing his knowledge with other investors through timely blog posts, daily watch lists in the forum, weekly webinars, and helpful advice within the chatroom.

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