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My name is Martin, from Cape Town, ZA. I'm the Co-Founder and Chief Editor of the growing Traders Community. I've an experience of over 8 years in Forex as a Portfolio manager, Trader and guest writer for many financiel and forex websites such as,... More
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  • Netflix Shares Show Upside Potential After Reports 0 comments
    Sep 23, 2012 10:22 PM

    Following a lengthy slide, Netflix seems to gain some ground and the stocks are expected to continue their upwards trend in the next few months.

    A new beginning for Netflix after disheartening reports

    Netflix stocks are far from what they used to be and the last year has been brutal for share holders, but despite the off-putting reports there is still hope. The company is hardly one to be given as example but it seems like the stock was oversold and it has potential to move upwards. While some traders found the company's statements that meeting the yearly growth targets is uncertain and jumped to conclusions, patient investors can capitalize on the volatility.

    A blessing in disguise

    Following the uninspired split of 2011 when Netflix decided to offer two distinct plans for DVDs and online viewing, the stock plunged and it seems like they will hit rock bottom soon. More recently, the company has been hit by a ruling issued by an U.S. District Judge in Massachusetts stating that Netflix is required to offer a closed captioning option. This is meant to aid those customers with impaired hearing and although it might look like another blow for Netflix it is a blessing in disguise.

    Their competitors are Amazon and Dish Network and the same law will apply to these two companies, which unlike Netflix haven't tried to add closed captions. This can give them a competitive advantage in the next few months and if Netflix capitalizes on it, the shares have the potential of rising rapidly. In addition to striking a serious blow to its competition, the company might also expand its customer base. There are not so many hearing impaired people worldwide, but their number is increasing at an alarming pace, which is good news for Netflix.

    Netflix needs to change its public perception

    The current management is regarded by some to have dragged the company to the gutter and it is not only their decisions that are criticized. Netflix needs to look more like a friendly and socially conscious company, instead of one that is ready to alienate not only prospective customers but also existing ones. By offering closed captions they are making just a tiny step into the right direction and it would help if the officials would succeed in presenting this as a voluntary action rather than the result of having the law forcing their hand.

    Netflix stock rose since last year and the increase in streamed movies indicates the fact that the users are still hooked on this service. Compared to similar quarters from previous years, 2012 is still a dismal year but with the shares being as cheap as they are, this can be a good time to buy. The change in pricing options hurt their profit margin in 2011, but with more users streaming movies and the upcoming introduction of closed captioning, Netflix's future might not be as grim as some investors predict.

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