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Netflix Stock Price Crashes in After-Hours Trading

82 points by prateekj 12y ago

maguirre 12y ago
I think there is plenty of growth opportunity for Netflix 1- After hours trading is notorious for volatility 2- HBO announcement today 3- Subscriber growth did not meet expectations Are all likely affecting the stock. However when it's all said in done who else is competing with against netflix?
- goodcanadian 12y ago
  Not to mention that the stock looks absurdly overpriced to me.
  - bskap 12y ago
    Based on the dollar value of an individual share or their market capitalization? Their current market capitalization (after the crash) is about $20 billion, which is less than $400 for each monthly subscriber they currently have. That's not too bad of a price, especially not for a company that's still growing at a rate of several million subscribers per quarter.
    - akbar501 12y ago
      This is purely from a 30 second look, but if I had to make the case for Netflix being richly valued I'd go with: 1. Very high P/E ratio. Thus strong future growth is baked into price. So, a buyer of the stock today is already paying for strong growth. 2. Based on #1, the risk is higher as you're prepaying for future growth. And the future is uncertain. 3. Institutional ownership is already high, so you're more likely to see outflows than strong inflows. I don't like investing on this metric, but it does affect price during market fluctuations. 4. Price/Sales is high. 5. Low margin I don't trade much, but if I did I'd stay away due to the lack of shorts, thus no short squeeze to play. Of course, on the positive side it dominates its market, has strong growth, and generates free cash flow. Again, I did not do a genuine analysis so I could be way off on some of the above.
    - goodcanadian 12y ago
      Based primarily on the extraordinarily high price to earnings ratio and the complete lack of anything resembling consistent earnings growth. Metrics like revenue and subscriber numbers don't mean much if they can't reliably make a profit off of them. Don't get me wrong; I do think that Netflix (or something like it) represents the future of content delivery and that there is incredible room for growth. Unfortunately, the potential upside is already priced into the shares. They may have a first mover advantage, but they do have competition (Hulu, Amazon, et cetera). I think they would be a decent speculative bet at a PE of 20, but not at a PE over 100.
- johneth 12y ago
  > However when it's all said in done who else is competing with against netflix? Well, HBO, Amazon and Hulu in the US. In my country (the UK), there are several local competitors; Now TV, Sky, BT, 4oD, BBC iPlayer (sort of), Amazon. I would assume it's a fairly similar situation in most of the markets they operate in (e.g. HBO Nordic in Scandinavia).
  - nknighthb 12y ago
    That raises the question of what it means to "compete" with Netflix. All three you mention currently have severe deficits compared to Netflix. HBO won't be available to non-cable/satellite subscribers until next year, has limited content, and at this point unknown pricing. (Seems unlikely to be less than Netflix, might end up being 2x Netflix.) Amazon has limited content, a crappy UX, and a pricing perception problem (your only option is $99 up-front). Hulu has very limited content, ads even for paying customers, and a crappy UX, all while charging the same amount as Netflix. A cord-cutter is almost certainly going to be paying Netflix. They might pay some of the others, too, but maybe not, and probably not all of them. It seems unlikely they'd pay any of the others without paying Netflix. Is it really competition when your competitor's customers are your customers?
    - johneth 12y ago
      > All three you mention currently have severe deficits compared to Netflix. I agree to your points to a certain extent. However, you're forgetting that Netflix also has deficits to the other three. HBO, as I understand it, would most likely have up-to-date recent films, something Netflix severely lacks and people actually want. Amazon is bundled with Prime, a big draw for a lot of people which makes it's offering look more desirable in many ways. Hulu is free (except Hulu Plus). Probably most importantly, all three have unique content which is not available on Netflix (especially true of HBO). > It seems unlikely they'd pay any of the others without paying Netflix. I don't think this is necessarily true. With VoD services like these, people will use the ones which have the content they want to watch. As the 'incumbant', Netflix will have certain first mover advantages in terms of brand recognition, but this won't last forever and the market still has lots of room for growth.
- dragonwriter 12y ago
  > However when it's all said in done who else is competing with against netflix? Amazon already with Prime. With HBO announcement, that's another big threat -- and if it means that more of the existing content producers (on whom Netflix relies for much of its library) are also going to take the same route, its a big problem for Netflix. Once it got real streaming competition (and thus, competitors for titles and exclusivity) and stopped even trying to big a universal library (because that wouldn't work anymore), Netflix -- and its competitors -- were essentially limited to being HBO but without the burden of cable (and without having yet built up the library of first-party content HBO has). But once HBO gets into that game, the opportunities got a lot narrower.
- Vespasian 12y ago
  Free TV (stronger competation compared than in the US), Public TV, Sky, Watchever, Amazon to name a few here in Germany(a market traditionally difficult for Pay TV). Personally I think netflix has the way better technology but content wise they are all pretty mediacore at best. On another note: I might be reading it wrong but if netflix made 60 million USD with 53 million users that would be $4 per user per year which seems little.
ycskyspeak 12y ago
Netflix has strong fundamentals. They could be a good buy actually considering the stock is down
- lucb1e 12y ago
  That sounds familiar... > Buy Bitcoin while it's cheap!
  - ossreality 12y ago
    So, "investing".
  - meowface 12y ago
    At this point I'm convinced at least one cryptocurrency is going to be very valuable in the distant future, I just have no idea if it'll actually be Bitcoin.
    - _almosnow 12y ago
      I'm with you, one would be so valuable that even if you bought a considerable amount in all of them, the net gain would easily overshadow the loss of the others. Kind of how VC money works btw...
      - harmegido 12y ago
        The problem is that the crypto-currency of the future may not have been implemented yet.
- hnnewguy 12y ago
  >Netflix has strong fundamentals. It has a P/E of over 130, and just reported slower than expected subscriber growth. Of what specific fundamentals do you speak?
  - humannature 12y ago
murphysbooks 12y ago
Netflix will be in a stronger position as they build their library of content. IMO, the only compines in a really strong position in entertainment are the content producers and those that deliver the last mile.
click170 12y ago
I'm no finance expert, but looking at the graphs, hasn't it already recovered? https://www.google.com/finance?q=NASDAQ%3ANFLX https://www.google.com/finance?q=NASDAQ%3ANFLX The story reported it was at 339. Looks like it's currently at 448. Edit: Nevermind, didn't notice the "After Hours" price in tiny-text above the graph which shows similar numbers to those reported in the story.
- mbrubeck 12y ago
  You can click on "Settings" and then check the box for "Extended hours" to see the after-hours trading in the graph itself.
staunch 12y ago
It's not a zero sum game. The only limiting factor is how much really great content can be created. When the market for premium streaming matures it's going to effectively be what we always wished cable was. Netflix can only lose if they fail to keep going.
- freyr 12y ago
  > When the market for premium streaming matures it's going to effectively be what we always wished cable was. Which is what, exactly? A la carte programs? Netflix isn't that. A la carte channels? Netflix isn't quite that either. Netflix is positioning itself as something between a streaming TV network (producing original content) and a streaming Time Warner (bundle all the content, acting as gatekeeper to the end consumer). I like Netflix, but I doubt it's long-term intent is to be the streaming utopia we've dreamt of. In that context, Netflix currently enjoys the advantage of being one of the few popular streaming networks/content providers right now (along with Amazon Prime, and perhaps Hulu Plus in the U.S.). Moving forward, they could swallow up or crush new competition, consolidating their power and pushing them more into the Time Warner category. That would be very good for them, financially. Or competition could build up around them, relegating them to the streaming network category.
xiaoma 12y ago
I used to be really bullish on Netflix, but then Amazon started giving Amazon Prime members streaming access to a huge collection of free TV and movies. The offerings aren't exactly the same and each platform does have its own exclusive shows, so a huge TV fan might want both. But for a lot of people, one is enough and if that one is Amazon Prime then you get free shipping of all your Amazon deliveries as a bonus! For those of us who had already become Prime members for the shipping, Netflix has even less of a hope of competing. Due to its size, Amazon can also expect to extract an better selection of streaming titles from media companies. Netflix should be terrified.
- anigbrowl 12y ago
  I'm sure they're worried, but Netflix has a big lead on Amazon in the original content stakes. As a filmmaker I would much rather sign a deal with them than with Amazon, even for the same nominal dollar amount - Netflix has built an awful lot of industry good will over the last 10 years by treating producers fairly.
- heynk 12y ago
  I had the same assumptions about Amazon Prime's video offering being a replacement for Netflix. In fact, that was my motivating factor in buying prime. Since then, I have used Amazon video only a few times and Netflix pretty much every day. Netflix has such better selection and platform support; Amazon video is a pain to use. Ironically, I now love Prime for the 2-day shipping and would happily renew it without the video offering.
- serve_yay 12y ago
  It doesn't seem like a lot of people actually use Amazon's video thing, though. But besides that, I think Netflix has a real problem in that they are a thin layer of tech (OK maybe not so thin) over a huge amount of intellectual property. Not only do they not own that IP, the companies they license from can just keep increasing their rates as Netflix makes more money. They were really cleaning up for a while after their deal with Starz a few years back, but Starz wised up and demanded more money when the contract was up for renewal. I don't see how they get around this. On the other hand, people do seem to just watch whatever is on Netflix. So, maybe they can get away with licensing a less-expensive mix of content plus of course their in-house stuff.
fvinci 12y ago
I know comcast is more diversified, but wouldn't this be a threat to them too? Why no effect on their after hours price?
th0br0 12y ago
The reason for this is their EPS being down by about half of the expectations: http://www.zerohedge.com/news/2014-10-15/netflix-obliterated-after-guiding-half-expected-q4-eps-streaming-adds-hit-brick-wall http://www.zerohedge.com/news/2014-10-15/netflix-obliterated...
- deleted 12y ago
  [deleted]
tzz 12y ago
Sorry not relevant to the subject, but who is allowed to trade after-hours? How come some people are allowed to take advantage of trading while the general public is not allowed?
- sdeyerle 12y ago
  Anyone is allowed, but there is lower volume and more volatility.
  - grecy 12y ago
    genuine question - how come when I submit an after hours trade through my bank it says "trading is closed, your order will be submitted first thing tomorrow" ?
    - chadzawistowski 12y ago
      Could be a bank issue rather than a market one.
    - minimax 12y ago
      It could be your bank just doesn't offer it. For most retail brokerage accounts you have to specifically request an extended "time in force" if you want to send orders outside of the core session.
    - WalterSear 12y ago
      You can only deal in futures after hours.
    - akbar501 12y ago
      Just an FYI, if you trade after hours remember to set your price (buy or sell). As it's after hours, there is no market price, and therefore if you offer to buy 100 shares another party can sell at any price they want. Same goes for the sell side.
    - ennuihenry 12y ago
      It's your brokerage. For example, Tradeking allows trading from 8:00-9:30 ET and 4:00-5:00 ET. Some other brokerages, like Interactive Brokers, allow trading to 8:00 PM ET.
icantthinkofone 12y ago
After hours trading almost always means nothing. Ignore such headlines. Reality takes place during normal trading hours. After hours is for amateurs. If you want to get stupider than this article, I've seen some stocks trade down 50% after hours but open normal the next day. Besides, the whole market took a nosedive today. Means nothing.
- minimax 12y ago
  That is true in some cases but not for NFLX today. You should pull up the chart. Volume in NFLX exploded after the earnings announcement.
  - icantthinkofone 12y ago
    Any chart you pull up is not for after hours trading. Note that, while you agree what I said is true for most cases, I was downvoted. What is this? Reddit?
    - minimax 12y ago
      Go here https://www.google.com/finance?q=NFLX https://www.google.com/finance?q=NFLX At the top left of the chart set zoom to 1d. At the bottom left of the chart click settings and tick the box for "Extended Hours". That gets you volume data for the post market session. I didn't downvote you, but I do see these kinds of comments ("hey don't trust the post-market session") after earnings announcements a lot, and I usually try to cross-check the chart to see whether they're on point or not.
      - icantthinkofone 12y ago
        I was a day-trader for 15 years so I know how to find that info. I'll say it again, after the market closes, the professionals go home. Anything you see after that is by amateurs.
        minimax 12y ago
notastartup 12y ago
Blame Popcorn Time. Why would people pay for far fewer selection and mediocre movies and tv shows when they can have unlimited access to every movie and tv show?
- jaredmcateer 12y ago
  I just installed popcorn time, I tried a few tv shows but couldn't find many, or any, peers on many of them and the show wouldn't play well, with lots of buffering, or at all, or it was missing aired episodes in available seasons. No tv show on Netflix does this to be and that's why I pay. While the selection seems better on Popcorn Time, it's really just the most popular shows near the latest episodes that seem to work so the "extra" selection just made it a more frustrating experience.
  - notastartup 12y ago
    it worked fine for me. although i watch movies more than tv shows. i think it works pretty good given that its free and they are constantly improving it.
mathattack 12y ago
I think people are missing the big picture on what happened... This is not that the market is giving up on Netflix. It's that most of Netflix's value is based on an enormous increase in growth. Taking a look at their financials [0] their PE was 139 pre-announcement. It's still north of 100. Compare that with 27 of Google. Very high growth assumptions. Another way to look at it is they are still up ~250% over the past year and a half. When you're this highly priced, there is no room for mistakes or missing Wall Street expectations. One other note... There is a lot of hedge fund activity on Netflix, which can increase the immediate pop before or after a hit. That said... Speaking as a subscriber... I'm still paying, but I'm not using nearly as much as I used to, and I'm using Amazon Prime more and more. [0] https://www.google.com/finance?cid=672501 https://www.google.com/finance?cid=672501
RockyMcNuts 12y ago
I would say mostly about the lower subscriber growth. When expectations are high, if expectations aren't met, the adjustment can be abrupt. Time Warner (HBO + Warner Brothers + numerous cable channels) is in the same content/TV distribution business, $4.3b in profit, market cap of $62b. Netflix, $0.2b in profit, $5b in REVENUE, market cap of $27b (well, now $20b). Netflix is competing with Amazon streaming, Apple TV/iTunes, to a lesser extent Google, Hulu. Also now HBO, they announced today they would start letting people subscribe over the Internet without a cable subscription, all the other channels are getting in the over-the-top streaming business. Comcast + Time Warner Cable (different from Time Warner) are looking to merge and perform a cashectomy on Netflix via 'fast lanes', before TV subscriber losses from cord-cutting really start cutting into their flesh. (Can anyone doubt that's about to happen? Anyone who has compared the experience of e.g. Roku with a cable box can see over-the-top is a 10x improvement in UX at a lower price. And with even HBO available over-the-top, literally the only reason left to subscribe to cable is live sports.) Growth is not a given. It's a tough landscape and no guarantee Netflix will be the last one standing. $20b is still a lot of money for a company with no profits, in a fight for its life.
- rorski 12y ago
  I'd add as a cable-cutter sports fan that even live sports is not a big deal without cable. Buy a HD antenna and you get ABC, CBS, NBC, and Fox, which covers at least the NFL and a bunch of other prominent sporting events. Buy mlb.tv if you're into baseball, NBA league pass if you're into basketball, or NHL center ice if you're into hockey - or just find live streams of the games online (but YMMV on the quality of course). Throw in a shared login with a friend for Comcast/DirectV/whatever, and you get ESPN/ESPN2, TBS, Fox Sports, NBCSN, and others.
  - RockyMcNuts 12y ago
    very true...although HD over the air coverage is not universal and can be finicky even in areas with supposedly decent coverage. and not to mention pirate streams via e.g. sportlemon.
  - ptk 12y ago
Steko 12y ago
Price increase killed their U.S. growth. Hulu makes over half their money from ads, I'd expect Netflix will eventually go down that road -- $4.99/mo or free with ads and $9.99 without.
brownbat 12y ago
I know the Netflix story is all about streaming now, but I'm kind of sad that according to the financials, Netflix's DVD section has halved its subscribers over the last two years. That service definitely seems to be degrading, almost everything in my queue has become perpetually stuck on "very long wait," something rare for me of a couple years back. They're clearly winding things down. I don't know what happens in a couple years for anyone who wants to see an old movie. The streaming libraries are still incredibly thin. New releases will be available somewhere, sure. But we're facing the death of access for film history buffs or hardcore genre fans.
- waylandsmithers 12y ago
  > I don't know what happens in a couple years for anyone who wants to see an old movie Your local library? I've found some have a surprisingly good selection, and library networks probably make most movies available within a few days' wait.
- wmf 12y ago
  I wonder if things would have been better if the Qwikster spinout had happened. At least the Qwikster execs would be allowed to care about their business.
  - arh68 12y ago
    Would this be a good time, then, for a Qwikster clone to pop up? Given the impending market opening? I wonder what they could do better catering to a narrower market. I dropped Netflix DVD service, but I'd consider something better.
    - wmf 12y ago
      That sounds like building an ISP to take customers from Comcast. If you could get all the customers at once it would work, but otherwise the lack of scale would be hard to overcome. Maybe we should convince Icahn to buy some Netflix stock...
- thefreeman 12y ago
kolev 12y ago
I find myself using Amazon Instant Videos, Vudu, and Google Play Movies more and more, so, no wonder if I'm not the only one. The DVD service is a friction, I have it, but I have DVDs with me for over 6 months, and no time to watch them and get new ones. Before that, I had a DVD with me for nearly 2 years! Weirdly, Redbox Instant just died, so, this should've helped Netflix by a tiny bit, but still... Why are the movie studios so greedy? People still steal their movies and torrent them, so, I'm missing a lot of movies for which I could've paid a premium, but having kids, and all prevents me from watching them at the premiere, so, I rent them later and they make a lot less from me and many are like me, I'm sure. It's not about the price, it's all about the convenience, and I hope those old crooks get this once and for all. I'm sure if people had an option to watch a new movie without going to the theater, piracy would drop significantly, but I know there are people who'd always pirate even if the movie is $0.99 - people who don't value their time, nerves, and don't mind the risk of getting sued, I guess.
neovive 12y ago
With so many players in the mix, I wonder if some consolidation is likely in the near future. Less streaming services with more content breadth is much more valuable to consumers than figuring out which services offer which content.

82 points by prateekj 12y ago

I think there is plenty of growth opportunity for Netflix 1- After hours trading is notorious for volatility 2- HBO announcement today 3- Subscriber growth did not meet expectations Are all likely affecting the stock. However when it's all said in done who else is competing with against netflix?

goodcanadian 12y ago
Not to mention that the stock looks absurdly overpriced to me.
- bskap 12y ago
  Based on the dollar value of an individual share or their market capitalization? Their current market capitalization (after the crash) is about $20 billion, which is less than $400 for each monthly subscriber they currently have. That's not too bad of a price, especially not for a company that's still growing at a rate of several million subscribers per quarter.
  - akbar501 12y ago
    This is purely from a 30 second look, but if I had to make the case for Netflix being richly valued I'd go with: 1. Very high P/E ratio. Thus strong future growth is baked into price. So, a buyer of the stock today is already paying for strong growth. 2. Based on #1, the risk is higher as you're prepaying for future growth. And the future is uncertain. 3. Institutional ownership is already high, so you're more likely to see outflows than strong inflows. I don't like investing on this metric, but it does affect price during market fluctuations. 4. Price/Sales is high. 5. Low margin I don't trade much, but if I did I'd stay away due to the lack of shorts, thus no short squeeze to play. Of course, on the positive side it dominates its market, has strong growth, and generates free cash flow. Again, I did not do a genuine analysis so I could be way off on some of the above.
  - goodcanadian 12y ago
    Based primarily on the extraordinarily high price to earnings ratio and the complete lack of anything resembling consistent earnings growth. Metrics like revenue and subscriber numbers don't mean much if they can't reliably make a profit off of them. Don't get me wrong; I do think that Netflix (or something like it) represents the future of content delivery and that there is incredible room for growth. Unfortunately, the potential upside is already priced into the shares. They may have a first mover advantage, but they do have competition (Hulu, Amazon, et cetera). I think they would be a decent speculative bet at a PE of 20, but not at a PE over 100.
johneth 12y ago
> However when it's all said in done who else is competing with against netflix? Well, HBO, Amazon and Hulu in the US. In my country (the UK), there are several local competitors; Now TV, Sky, BT, 4oD, BBC iPlayer (sort of), Amazon. I would assume it's a fairly similar situation in most of the markets they operate in (e.g. HBO Nordic in Scandinavia).
- nknighthb 12y ago
  That raises the question of what it means to "compete" with Netflix. All three you mention currently have severe deficits compared to Netflix. HBO won't be available to non-cable/satellite subscribers until next year, has limited content, and at this point unknown pricing. (Seems unlikely to be less than Netflix, might end up being 2x Netflix.) Amazon has limited content, a crappy UX, and a pricing perception problem (your only option is $99 up-front). Hulu has very limited content, ads even for paying customers, and a crappy UX, all while charging the same amount as Netflix. A cord-cutter is almost certainly going to be paying Netflix. They might pay some of the others, too, but maybe not, and probably not all of them. It seems unlikely they'd pay any of the others without paying Netflix. Is it really competition when your competitor's customers are your customers?
  - johneth 12y ago
    > All three you mention currently have severe deficits compared to Netflix. I agree to your points to a certain extent. However, you're forgetting that Netflix also has deficits to the other three. HBO, as I understand it, would most likely have up-to-date recent films, something Netflix severely lacks and people actually want. Amazon is bundled with Prime, a big draw for a lot of people which makes it's offering look more desirable in many ways. Hulu is free (except Hulu Plus). Probably most importantly, all three have unique content which is not available on Netflix (especially true of HBO). > It seems unlikely they'd pay any of the others without paying Netflix. I don't think this is necessarily true. With VoD services like these, people will use the ones which have the content they want to watch. As the 'incumbant', Netflix will have certain first mover advantages in terms of brand recognition, but this won't last forever and the market still has lots of room for growth.
dragonwriter 12y ago
> However when it's all said in done who else is competing with against netflix? Amazon already with Prime. With HBO announcement, that's another big threat -- and if it means that more of the existing content producers (on whom Netflix relies for much of its library) are also going to take the same route, its a big problem for Netflix. Once it got real streaming competition (and thus, competitors for titles and exclusivity) and stopped even trying to big a universal library (because that wouldn't work anymore), Netflix -- and its competitors -- were essentially limited to being HBO but without the burden of cable (and without having yet built up the library of first-party content HBO has). But once HBO gets into that game, the opportunities got a lot narrower.
Vespasian 12y ago
Free TV (stronger competation compared than in the US), Public TV, Sky, Watchever, Amazon to name a few here in Germany(a market traditionally difficult for Pay TV). Personally I think netflix has the way better technology but content wise they are all pretty mediacore at best. On another note: I might be reading it wrong but if netflix made 60 million USD with 53 million users that would be $4 per user per year which seems little.

ycskyspeak 12y ago

Netflix has strong fundamentals. They could be a good buy actually considering the stock is down

lucb1e 12y ago
That sounds familiar... > Buy Bitcoin while it's cheap!
- ossreality 12y ago
  So, "investing".
- meowface 12y ago
  At this point I'm convinced at least one cryptocurrency is going to be very valuable in the distant future, I just have no idea if it'll actually be Bitcoin.
  - _almosnow 12y ago
    I'm with you, one would be so valuable that even if you bought a considerable amount in all of them, the net gain would easily overshadow the loss of the others. Kind of how VC money works btw...
    - harmegido 12y ago
      The problem is that the crypto-currency of the future may not have been implemented yet.
hnnewguy 12y ago
>Netflix has strong fundamentals. It has a P/E of over 130, and just reported slower than expected subscriber growth. Of what specific fundamentals do you speak?
- humannature 12y ago

murphysbooks 12y ago

Netflix will be in a stronger position as they build their library of content. IMO, the only compines in a really strong position in entertainment are the content producers and those that deliver the last mile.

click170 12y ago

I'm no finance expert, but looking at the graphs, hasn't it already recovered? https://www.google.com/finance?q=NASDAQ%3ANFLX https://www.google.com/finance?q=NASDAQ%3ANFLX The story reported it was at 339. Looks like it's currently at 448. Edit: Nevermind, didn't notice the "After Hours" price in tiny-text above the graph which shows similar numbers to those reported in the story.

mbrubeck 12y ago
You can click on "Settings" and then check the box for "Extended hours" to see the after-hours trading in the graph itself.

staunch 12y ago

It's not a zero sum game. The only limiting factor is how much really great content can be created. When the market for premium streaming matures it's going to effectively be what we always wished cable was. Netflix can only lose if they fail to keep going.

freyr 12y ago
> When the market for premium streaming matures it's going to effectively be what we always wished cable was. Which is what, exactly? A la carte programs? Netflix isn't that. A la carte channels? Netflix isn't quite that either. Netflix is positioning itself as something between a streaming TV network (producing original content) and a streaming Time Warner (bundle all the content, acting as gatekeeper to the end consumer). I like Netflix, but I doubt it's long-term intent is to be the streaming utopia we've dreamt of. In that context, Netflix currently enjoys the advantage of being one of the few popular streaming networks/content providers right now (along with Amazon Prime, and perhaps Hulu Plus in the U.S.). Moving forward, they could swallow up or crush new competition, consolidating their power and pushing them more into the Time Warner category. That would be very good for them, financially. Or competition could build up around them, relegating them to the streaming network category.

xiaoma 12y ago

I used to be really bullish on Netflix, but then Amazon started giving Amazon Prime members streaming access to a huge collection of free TV and movies. The offerings aren't exactly the same and each platform does have its own exclusive shows, so a huge TV fan might want both. But for a lot of people, one is enough and if that one is Amazon Prime then you get free shipping of all your Amazon deliveries as a bonus! For those of us who had already become Prime members for the shipping, Netflix has even less of a hope of competing. Due to its size, Amazon can also expect to extract an better selection of streaming titles from media companies. Netflix should be terrified.

anigbrowl 12y ago
I'm sure they're worried, but Netflix has a big lead on Amazon in the original content stakes. As a filmmaker I would much rather sign a deal with them than with Amazon, even for the same nominal dollar amount - Netflix has built an awful lot of industry good will over the last 10 years by treating producers fairly.
heynk 12y ago
I had the same assumptions about Amazon Prime's video offering being a replacement for Netflix. In fact, that was my motivating factor in buying prime. Since then, I have used Amazon video only a few times and Netflix pretty much every day. Netflix has such better selection and platform support; Amazon video is a pain to use. Ironically, I now love Prime for the 2-day shipping and would happily renew it without the video offering.
serve_yay 12y ago
It doesn't seem like a lot of people actually use Amazon's video thing, though. But besides that, I think Netflix has a real problem in that they are a thin layer of tech (OK maybe not so thin) over a huge amount of intellectual property. Not only do they not own that IP, the companies they license from can just keep increasing their rates as Netflix makes more money. They were really cleaning up for a while after their deal with Starz a few years back, but Starz wised up and demanded more money when the contract was up for renewal. I don't see how they get around this. On the other hand, people do seem to just watch whatever is on Netflix. So, maybe they can get away with licensing a less-expensive mix of content plus of course their in-house stuff.

fvinci 12y ago

I know comcast is more diversified, but wouldn't this be a threat to them too? Why no effect on their after hours price?

th0br0 12y ago

The reason for this is their EPS being down by about half of the expectations: http://www.zerohedge.com/news/2014-10-15/netflix-obliterated-after-guiding-half-expected-q4-eps-streaming-adds-hit-brick-wall http://www.zerohedge.com/news/2014-10-15/netflix-obliterated...

deleted 12y ago
[deleted]

tzz 12y ago

Sorry not relevant to the subject, but who is allowed to trade after-hours? How come some people are allowed to take advantage of trading while the general public is not allowed?

sdeyerle 12y ago
Anyone is allowed, but there is lower volume and more volatility.
- grecy 12y ago
  genuine question - how come when I submit an after hours trade through my bank it says "trading is closed, your order will be submitted first thing tomorrow" ?
  - chadzawistowski 12y ago
    Could be a bank issue rather than a market one.
  - minimax 12y ago
    It could be your bank just doesn't offer it. For most retail brokerage accounts you have to specifically request an extended "time in force" if you want to send orders outside of the core session.
  - WalterSear 12y ago
    You can only deal in futures after hours.
  - akbar501 12y ago
    Just an FYI, if you trade after hours remember to set your price (buy or sell). As it's after hours, there is no market price, and therefore if you offer to buy 100 shares another party can sell at any price they want. Same goes for the sell side.
  - ennuihenry 12y ago
    It's your brokerage. For example, Tradeking allows trading from 8:00-9:30 ET and 4:00-5:00 ET. Some other brokerages, like Interactive Brokers, allow trading to 8:00 PM ET.

icantthinkofone 12y ago

After hours trading almost always means nothing. Ignore such headlines. Reality takes place during normal trading hours. After hours is for amateurs. If you want to get stupider than this article, I've seen some stocks trade down 50% after hours but open normal the next day. Besides, the whole market took a nosedive today. Means nothing.

minimax 12y ago
That is true in some cases but not for NFLX today. You should pull up the chart. Volume in NFLX exploded after the earnings announcement.
- icantthinkofone 12y ago
  Any chart you pull up is not for after hours trading. Note that, while you agree what I said is true for most cases, I was downvoted. What is this? Reddit?
  - minimax 12y ago
    Go here https://www.google.com/finance?q=NFLX https://www.google.com/finance?q=NFLX At the top left of the chart set zoom to 1d. At the bottom left of the chart click settings and tick the box for "Extended Hours". That gets you volume data for the post market session. I didn't downvote you, but I do see these kinds of comments ("hey don't trust the post-market session") after earnings announcements a lot, and I usually try to cross-check the chart to see whether they're on point or not.
    - icantthinkofone 12y ago
      I was a day-trader for 15 years so I know how to find that info. I'll say it again, after the market closes, the professionals go home. Anything you see after that is by amateurs.
      - minimax 12y ago

notastartup 12y ago

Blame Popcorn Time. Why would people pay for far fewer selection and mediocre movies and tv shows when they can have unlimited access to every movie and tv show?

jaredmcateer 12y ago
I just installed popcorn time, I tried a few tv shows but couldn't find many, or any, peers on many of them and the show wouldn't play well, with lots of buffering, or at all, or it was missing aired episodes in available seasons. No tv show on Netflix does this to be and that's why I pay. While the selection seems better on Popcorn Time, it's really just the most popular shows near the latest episodes that seem to work so the "extra" selection just made it a more frustrating experience.
- notastartup 12y ago
  it worked fine for me. although i watch movies more than tv shows. i think it works pretty good given that its free and they are constantly improving it.

mathattack 12y ago

I think people are missing the big picture on what happened... This is not that the market is giving up on Netflix. It's that most of Netflix's value is based on an enormous increase in growth. Taking a look at their financials [0] their PE was 139 pre-announcement. It's still north of 100. Compare that with 27 of Google. Very high growth assumptions. Another way to look at it is they are still up ~250% over the past year and a half. When you're this highly priced, there is no room for mistakes or missing Wall Street expectations. One other note... There is a lot of hedge fund activity on Netflix, which can increase the immediate pop before or after a hit. That said... Speaking as a subscriber... I'm still paying, but I'm not using nearly as much as I used to, and I'm using Amazon Prime more and more. [0] https://www.google.com/finance?cid=672501 https://www.google.com/finance?cid=672501

RockyMcNuts 12y ago

I would say mostly about the lower subscriber growth. When expectations are high, if expectations aren't met, the adjustment can be abrupt. Time Warner (HBO + Warner Brothers + numerous cable channels) is in the same content/TV distribution business, $4.3b in profit, market cap of $62b. Netflix, $0.2b in profit, $5b in REVENUE, market cap of $27b (well, now $20b). Netflix is competing with Amazon streaming, Apple TV/iTunes, to a lesser extent Google, Hulu. Also now HBO, they announced today they would start letting people subscribe over the Internet without a cable subscription, all the other channels are getting in the over-the-top streaming business. Comcast + Time Warner Cable (different from Time Warner) are looking to merge and perform a cashectomy on Netflix via 'fast lanes', before TV subscriber losses from cord-cutting really start cutting into their flesh. (Can anyone doubt that's about to happen? Anyone who has compared the experience of e.g. Roku with a cable box can see over-the-top is a 10x improvement in UX at a lower price. And with even HBO available over-the-top, literally the only reason left to subscribe to cable is live sports.) Growth is not a given. It's a tough landscape and no guarantee Netflix will be the last one standing. $20b is still a lot of money for a company with no profits, in a fight for its life.

rorski 12y ago
I'd add as a cable-cutter sports fan that even live sports is not a big deal without cable. Buy a HD antenna and you get ABC, CBS, NBC, and Fox, which covers at least the NFL and a bunch of other prominent sporting events. Buy mlb.tv if you're into baseball, NBA league pass if you're into basketball, or NHL center ice if you're into hockey - or just find live streams of the games online (but YMMV on the quality of course). Throw in a shared login with a friend for Comcast/DirectV/whatever, and you get ESPN/ESPN2, TBS, Fox Sports, NBCSN, and others.
- RockyMcNuts 12y ago
  very true...although HD over the air coverage is not universal and can be finicky even in areas with supposedly decent coverage. and not to mention pirate streams via e.g. sportlemon.
- ptk 12y ago

Steko 12y ago

Price increase killed their U.S. growth. Hulu makes over half their money from ads, I'd expect Netflix will eventually go down that road -- $4.99/mo or free with ads and $9.99 without.

brownbat 12y ago

I know the Netflix story is all about streaming now, but I'm kind of sad that according to the financials, Netflix's DVD section has halved its subscribers over the last two years. That service definitely seems to be degrading, almost everything in my queue has become perpetually stuck on "very long wait," something rare for me of a couple years back. They're clearly winding things down. I don't know what happens in a couple years for anyone who wants to see an old movie. The streaming libraries are still incredibly thin. New releases will be available somewhere, sure. But we're facing the death of access for film history buffs or hardcore genre fans.

waylandsmithers 12y ago
> I don't know what happens in a couple years for anyone who wants to see an old movie Your local library? I've found some have a surprisingly good selection, and library networks probably make most movies available within a few days' wait.
wmf 12y ago
I wonder if things would have been better if the Qwikster spinout had happened. At least the Qwikster execs would be allowed to care about their business.
- arh68 12y ago
  Would this be a good time, then, for a Qwikster clone to pop up? Given the impending market opening? I wonder what they could do better catering to a narrower market. I dropped Netflix DVD service, but I'd consider something better.
  - wmf 12y ago
    That sounds like building an ISP to take customers from Comcast. If you could get all the customers at once it would work, but otherwise the lack of scale would be hard to overcome. Maybe we should convince Icahn to buy some Netflix stock...
thefreeman 12y ago

kolev 12y ago

I find myself using Amazon Instant Videos, Vudu, and Google Play Movies more and more, so, no wonder if I'm not the only one. The DVD service is a friction, I have it, but I have DVDs with me for over 6 months, and no time to watch them and get new ones. Before that, I had a DVD with me for nearly 2 years! Weirdly, Redbox Instant just died, so, this should've helped Netflix by a tiny bit, but still... Why are the movie studios so greedy? People still steal their movies and torrent them, so, I'm missing a lot of movies for which I could've paid a premium, but having kids, and all prevents me from watching them at the premiere, so, I rent them later and they make a lot less from me and many are like me, I'm sure. It's not about the price, it's all about the convenience, and I hope those old crooks get this once and for all. I'm sure if people had an option to watch a new movie without going to the theater, piracy would drop significantly, but I know there are people who'd always pirate even if the movie is $0.99 - people who don't value their time, nerves, and don't mind the risk of getting sued, I guess.

neovive 12y ago

With so many players in the mix, I wonder if some consolidation is likely in the near future. Less streaming services with more content breadth is much more valuable to consumers than figuring out which services offer which content.