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"I think Netflix (NFLX +4.1%) could be this decade's Amazon," says Whitney Tilson in a Yahoo...

"I think Netflix (NFLX +4.1%) could be this decade's Amazon," says Whitney Tilson in a Yahoo talk (video). Though Tilson admits to "trimming" his position during Netflix's run-up, he still considers it undervalued relative to other media providers - "They're trading at $400 per subscriber in a world of $1,000 per sub" - and argues its scale gives it a big edge - "Who else is going to spend $3 billion a year for streaming content?" Of course, many of the firms valued at $1,000/sub are getting a lot more than $8/month. Netflix investors seem to be betting the company's library and customer loyalty will allow it to raise prices over time. (U.K. deals)
Comments (7)
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    Sounds like pumping if he was trimming his positions big...
    13 May 2013, 02:32 PM Reply Like
  • RSI Raistlin
    , contributor
    Comments (400) | Send Message
     
    They are trading at 400 per sub vs 1000 per sub because they aren't getting much over 8 bucks a month while other companies can get over 100 a month
    13 May 2013, 02:49 PM Reply Like
  • gsterling
    , contributor
    Comments (552) | Send Message
     
    This decade's Amazon? Meaning making almost no money and selling for 100X P/E?
    13 May 2013, 03:08 PM Reply Like
  • jamie@thehammerstone.com
    , contributor
    Comments (12) | Send Message
     
    they are also trading at 150x earnings vs 15x for cable stocks but whats 1 zero between friends
    13 May 2013, 03:24 PM Reply Like
  • bobelouis
    , contributor
    Comments (47) | Send Message
     
    Again, Netflix doesn't own the content (even the content it says is theirs is not theirs), doesn't own the pipe into your device, it doesn't own the server the show rests upon.....it may own the software to deliver it to you......but it is at best a middleman, who can be easily squeezed by all points along the delivery lines, I believe you have to be reckless to ignore all this.....
    13 May 2013, 03:24 PM Reply Like
  • Slim Shady
    , contributor
    Comments (291) | Send Message
     
    Paying $1,000 per sub for a sub that generates $96 per year of revenue would be equivalent to a valuation of 10.4x revenues. If they could earn a net profit margin of 10% on those revenues on a normalized basis (it was less than 2% last quarter), that is a valuation of over 100x "normalized" earnings. Either Whitney Tilson doesn't understand basic math, or he's just pumping the stock (likely both).
    13 May 2013, 04:12 PM Reply Like
  • heloise8
    , contributor
    Comments (439) | Send Message
     
    I held onto a few shares in the event there was another runup. This is not a pump and dump. I will buy more when I can if the price is right.
    13 May 2013, 04:38 PM Reply Like
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