2-Star Stocks Poised to Plunge: Netflix?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, movie rental service Netflix (Nasdaq: NFLX  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Netflix's business and see what CAPS investors are saying about the stock right now.

Netflix facts

Headquarters (founded) Los Gatos, Calif. (1997)
Market Cap $3.6 billion
Industry Internet retail
Trailing-12-Month Revenue $3.4 billion
Management Founder/Chairman/CEO Reed Hastings
CFO David Wells
Return on Equity (average, past 3 years) 58.3%
Cash/Debt $804.5 million / $400.0 million
Competitors Amazon.com
Blockbuster
Coinstar

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 19% of the 9,528 members who have rated Netflix believe the stock will underperform the S&P 500 going forward.

A few months ago, one of those Fools, Becker2011, touched on the competitive headwinds working against Netflix:

In this game it is all about content, which boils down to who has more cash to buy it. Amazon ... signed a deal with Viacom adding Comedy Central and MTV to what they have to offer. As Amazon slowly enters this space [Netflix] is going to have more and more problems competing and retaining customers. Also, not to mention Coinstar's [Redbox] can't be helping either.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Netflix and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com and Netflix. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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