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Robert A. Graf
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Robert Graf is an independent investor and educator with a 20+ year academic background in neuroscience, pharmaceutical sciences and pharmacology. He focuses his attention on index options, top performing companies, commodities, and is a student of price action. He is founder, President, and... More
  • Netflix is indirectly driving digital TV sales this season 0 comments
    Nov 26, 2010 10:32 AM | about stocks: NFLX, WMT, COST, BBY, GLW

    Netflix (NASDAQ:NFLX) has sent out notices to subscribers of price increases to those still wanting DVDs in the mail, OR price decreases to those who switch to streaming, which may require a new TV (or at least a box for many), and serve as a catalyst for TV sales this season and beyond.

    As a subscriber to Netflix, I recently received in my e-mail inbox this notice from Netflix informing me that it was going to increase my plan $1 per month.  I have the plan that allows me to have one DVD at a time.  The surprising part is that they were offering me a discounted plan without DVDs for $7.99 per month, but I’d have to upgrade to a box or a digital TV to use my laptop to get instant access.  Although this move may not be brand new, the notice to all us subscribers was, and is timely to the holiday season.  It immediately got us thinking about replacing our quite fine SONY tube TV in the family room with another VIZIO like we have in the bedrooms.  (VIZIO is not listed and is an American brand headquartered in Irvine, California; top TV supplier to Walmart (NYSE:WMT)).  Back to the thread, I suspect that television upgrade discussion is happening a lot out there.  Importantly, the postage that Netflix will save bypassing the United States Post Office is another important factor that I’m sure has been and will continue to be a factor propelling the price of the stock higher.  People who love to get mail and get their DVDs so fast can continue for a little more which covers the postage for Netflix, so no one here really ends-up leaving their subscribership and those in the know who like the advent of streaming video and increased access will be sure not to be too disappointed.  Overall, it is my view that Netflix will help companies like Corning (NYSE:GLW), Walmart (WMT), Best Buy (NYSE:BBY), Costco (NASDAQ:COST), VIZIO (again, privately held), and other economically minded manufacturer/retailers who make LCD HDTVs or supply them.  I will recommend Netflix on a pullback using a bull put spread strategy.  Those who want the upside potential for a possible take-over bid may wish to hold Netflix (NFLX) shares, but be careful to enter properly.

    Disclosure: No current positions
    Stocks: NFLX, WMT, COST, BBY, GLW
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