For over the last 2 years and since the stock was trading in the low $20′s, I have been a huge supporter of Netflix (NFLX). I’ll be the first person to tell you that I didn’t expect the stock to boom as much as it did, but I’m not complaining.
At its current price I no longer believe Netflix is a good long-term play. The current price just doesn’t outweigh the risks, but that doesn’t mean it won’t ever be a long-term buy again. If Netflix can perform any of the following actions, I believe the stock will safely find a new home in the $200′s:
- Gain rights to stream current television show episodes.
- Gain rights to movies when they are released and not 21 days later.
- Sign partnerships with other major studios to beaf up their current movie catalogue available for online streaming.
- Redbox and Blockbuster officially vanish.
Unless Netflix can successfully manage to accomplish any of the items above, I believe the stock is grossly overpriced.
The company won’t continue adding subscribers add a record pace, nor will it continue to carry on the “new and innovative” luster it currently carries unless the service evolves.
Maybe that seems simple, but actually it really is…