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NFLX continues to hold high valuation

|Includes: GOOG, Netflix, Inc. (NFLX)

Netflix (NASDAQ: NFLX) continues to sustain a stratospheric valuation. In my October 23, 2010 posting: Is NFLX Overvalued, I compared its valuation with Google (NASDAQ: GOOG).   With a total enterprise value of $9.5 billion and its most recent quarter operating cashflow of just $42.2 million.  NFLX has many doubters as noted by an extremely high short ratio.

Recently, NFLX has taken steps to focus more on the streaming aspects of its business and less on the physical delivery of DVDs. By shifting what could be a less asset intensive and higher margin business model, NFLX adds more support to its valuation metrics.  This comes on the previous announcement of a streaming only subscription plan back in November 2010.

However, these changes seem to be enough to sustain interest in NFLX, which has shown higher price appreciation than GOOG over that time. Furthermore, NFLX's trajectory was higher, surpassing the $200 per share barrier before a decline, while GOOG had more of a downward arc.

Ticker 10/23/2010 Price 1/21/2011 Price % Change
NFLX $168.10 $182.09 8.3%
GOOG $612.53 $611.83 -0.1%

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.