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Netflix (NFLX +13.4%) resumes trading after a halt to reach as high as $84.50 before tripping up...

Netflix (NFLX +13.4%) resumes trading after a halt to reach as high as $84.50 before tripping up circuit breakers once again. All the excitement is tied to a 13D filed by Carl Icahn showing a 9.98% stake in Netflix and saying the company holds "significant strategic value due its dominant market position and global growth prospects". Now the question is if Icahn still sees shares as undervalued now that they have run up a hefty gain lickety-split.
Comments (23)
  • FlohaugL
    , contributor
    Comments (14) | Send Message
     
    Yippee ki-yay, MF!!! ;-)
    31 Oct 2012, 03:27 PM Reply Like
  • Sammy Lee
    , contributor
    Comments (302) | Send Message
     
    Dominant market position my ass.
    31 Oct 2012, 03:28 PM Reply Like
  • Tvaddic
    , contributor
    Comments (245) | Send Message
     
    They have 30 million subscribers, 3x more than all their competition combined. They are pretty dominate.
    31 Oct 2012, 05:30 PM Reply Like
  • Sammy Lee
    , contributor
    Comments (302) | Send Message
     
    I don't like to look at the world in such a static manner. What is the probability that their market share will remain at such rates with monstrous companies like Amazon on their heels?
    1 Nov 2012, 09:36 AM Reply Like
  • spald_fr
    , contributor
    Comments (2723) | Send Message
     
    Who's the manufacturer of Icahn's batteries?
    31 Oct 2012, 03:31 PM Reply Like
  • joemarolla23
    , contributor
    Comments (48) | Send Message
     
    oohhhhh yea. i was long 80 november 72.50 call options as of last week. christmas came early for me.
    31 Oct 2012, 03:43 PM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1882) | Send Message
     
    According to the filing at http://1.usa.gov/VE4VSd The vast majority of Icahn's 5.5MM share position are call options for 4,291,066 Shares, with an exercise price of $36.05/share, which expire on September 4, 2014. He has sold short put options representing same 4,291,066 Shares against this position as well.
    31 Oct 2012, 03:53 PM Reply Like
  • dgulick
    , contributor
    Comments (1490) | Send Message
     
    This is likely a stupid question, but why would he do it this way? Does it help him keep under the radar (and therefore produce less effect on the share price) when amassing a large position?

     

    Ironically, I just finished reading "Netflixed" by Gina Keating (very well done) and she goes into great detail on Icahn's influence over the Blockbuster board, eventually forcing Antioco out (who recognized the threat from Netflix) and putting Keyes in (who thought they could make money just sprucing up the stores and selling big gulps). As a devoted Netflix customer, and recently a shareholder I'm conflicted on how I should feel about this!

     

    http://cnnmon.ie/QV0KSj

     

    "Icahn said ... he's got some ideas about how Netflix (NFLX) can lift its stock's value."
    31 Oct 2012, 05:10 PM Reply Like
  • Intl Investment Services
    , contributor
    Comments (22) | Send Message
     
    This is a good tracking and an interesting siutation: I am curious how he can spend $168.9M on 5.5M shares (see Bloomberg). That means his average price is $30.5/sh. But if this is just the option premium and his exercise is $36/sh, that means he is paying $66/sh. Also since he is selling puts, the price could be lower. But can he claim he has acquire 10% share before he exercises the calls? I mean what if price drops below $36/sh on expiration date? Not sure about this rule.

     

    Thanks.
    31 Oct 2012, 06:59 PM Reply Like
  • CommodityRun
    , contributor
    Comments (121) | Send Message
     
    He is short the $36 PUT and long the $36 call (risk reversal), so he gets the stock at expiration no matter what the stock price does (synthetic long). And you are correct, he is effectively in at about $66.
    1 Nov 2012, 06:54 AM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1882) | Send Message
     
    SEC rules require treating any option that can be exercised within a short period of time into voting shares to be counted towards the 5% or above disclosure requirement. American calls can be exercised at any time. The puts sold were European puts which can't be exercised until specified exercise point. His play was on earnings as well as an acquisition if the stock languished in the $30's or 40's. My bet this wasn't and isn't serious activist play for him but for a horrible governance structure that fails to oversee Hastings.
    1 Nov 2012, 09:29 AM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1882) | Send Message
     
    note the calls are american type and he can exercise at anytime but the puts were european that can only be exercised at expiration.
    1 Nov 2012, 09:32 AM Reply Like
  • Intl Investment Services
    , contributor
    Comments (22) | Send Message
     
    Exactly my question: if price suddenly drops under $36 and his put can't be exercised, he doesn't have the 10% shares (he won't exercise the calls when price under $36). That means there will be a period of time the 10% is bogus. Of course, this is a big assumption. He does have about 1% direct ownership though.

     

    So the play is this: if current shareholders don't want him to be the largest one, then keep the price below $36 from now to Sept 4, 2014. But if price above $36, he can claim the largest shareholder anytime. Of course, many things can happen with this play.

     

    A tricky game for current big shareholders. It seems someone have been cornered.
    1 Nov 2012, 09:54 AM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (1882) | Send Message
     
    IBanks are on the other side of each of these derivatives - they have bought puts and sold calls. think they are running unhedged?

     

    Also, to vote the shares underlying the 4MM options Icahn has to right the $144MM check
    1 Nov 2012, 01:08 PM Reply Like
  • TrojanRay
    , contributor
    Comments (7) | Send Message
     
    For those of you who don't know or forgot.... Icahn also made huge investments in Blockbuster.

     

    We all know how well move went...
    31 Oct 2012, 05:28 PM Reply Like
  • tealone
    , contributor
    Comments (246) | Send Message
     
    If Netflix doesn't start getting some decent contracts on decent movies, nothing or anyone will make a long term difference. The old movie series are old and the movies older (at least those in English). I've been a customer and stock older for over 2 years and lost on both ends!
    31 Oct 2012, 05:41 PM Reply Like
  • tawse57
    , contributor
    Comments (728) | Send Message
     
    Quite a few people I know here in the UK took out a month's trial with Netflix but then cancelled at the end of trial all claiming that there was nothing to watch on there except old stuff.

     

    It might be big in the US but in the UK Amazon's Lovefilm seems to be the one offering new titles.
    31 Oct 2012, 07:02 PM Reply Like
  • ATG1977
    , contributor
    Comments (159) | Send Message
     
    heheh got in at 64- gonna ride a bit
    31 Oct 2012, 09:26 PM Reply Like
  • thorninside
    , contributor
    Comments (70) | Send Message
     
    this was a phenomenal move. Oct weekly options on the 70 calls went from .29 to over $ 14. unbelievable.
    1 Nov 2012, 06:38 AM Reply Like
  • joemarolla23
    , contributor
    Comments (48) | Send Message
     
    perhaps if netflix were to merge with another big company, they would get a ton of movie contracts.maybe netflix needs some new blood to run the company. in this day in age its who you know first and then what you know.
    1 Nov 2012, 07:31 AM Reply Like
  • thorninside
    , contributor
    Comments (70) | Send Message
     
    I agree joe. Its hard to believe long term netflix will be able to survive on their own.
    1 Nov 2012, 07:55 AM Reply Like
  • thorninside
    , contributor
    Comments (70) | Send Message
     
    Almost bought into the hype last night... glad I didn't....looks like its down a couple dollars in premarket trading.
    1 Nov 2012, 08:43 AM Reply Like
  • thorninside
    , contributor
    Comments (70) | Send Message
     
    Pretty sad in a strong market today that NFLX can't even breakeven... not a good sign. Of course I think the report was that Carl Icahn's average price was in the 60s.... so he is still laughing all the way to the bank.
    2 Nov 2012, 02:19 AM Reply Like
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