June 22 Ben Bernanke announced that deflation was not an imminent threat and Federal Reserve asset buying programs would cease, as scheduled, with QE2. Markets turned from green to red that day once the chairman made plans clear and continued south the 23rd and 24th.
As discussed recently, Netflix (NASDAQ:NFLX) is a unique growth company. In addition to impressive past performance, the business model operates cheaply and offers value that can sustain growth in a good or bad economy. Garnering affordable fixed rate subscription fees with shipping as a major expense, Netflix may actually benefit from slowing inflationary pressure.
Perhaps the only purveyor of more widely enjoyed, attractively priced entertainment for consumers is Facebook. Rapidly rising daily internet usage by young and old, worldwide, has the zero cost homepage and communication hub of millions becoming the most valuable marketing space on the planet.
Hulu Plus [General Electric (NYSE:GE), Disney (NYSE:DIS), News Corporation (NASDAQ:NWS)] offers a monthly subscription service geared largely toward television fans. In addition to posting many TV hits shortly after originally airing, the service recently signed a multi-year contract to provide Miramax films to subscribers upon DVD release. Mounting competition from Hulu, including negotiations in the social media space, and optimistic valuation following an epic run for NFLX caused me to join abundant short-sellers for a few weeks.
I bought shares back in late trading June 23 after Netflix CEO Reed Hastings joined the board of directors at Mark Zuckerberg's Facebook empire. The famed twenty-something CEO offered kind words in welcoming Hastings. Netflix appears to have one-upped Hulu, focusing and progressing on lasting success. Shares showed real strength by following a $7 gain the 23rd with another $1.24 the following session amidst broad stock market selling.
Current market weakness has me disinterested in going long NFLX. In fact my account remains positioned bearishly against the stock with long positions in XRT and QQQ puts, each of which holds a small percentage of funds in Netflix shares.
Disclosure: I am short QQQ, XRT.