Why Netflix Is Poised to Underperform

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 and see what CAPS investors are saying about the stock right now.

Netflix facts

Headquarters (founded)

Los Gatos, Calif. (1997)

Market Cap

$10.2 billion

Industry

Internet retail

Trailing-12-Month Revenue

$3.6 billion

Management

Founder/Chairman/CEO Reed Hastings

CFO David Wells

Return on Equity (average, past 3 years)

38.9%

Cash/Debt

$748.1 million / $400.0 million

Competitors

Apple

Comcast

Amazon.com

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

On CAPS, 20% of the 9,677 members who have rated Netflix believe the stock will underperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star DJoshuaRubin, highlighted Netflix's valuation as particularly unsustainable:

Just wouldn't pay [$10 billion] for it if I had [$10 billion]. No chance, no way, no how. Not now, not never. Visionary no doubt, could end up being worth that. Service is a mediocre experience -- utterly competent but now uninspired. Maybe this is unfair and Reed adds back some authentic passion for the movie business after completing global infrastructure, but anyone who has ever watched a moving film, and is seated deep in thought only to have the credits rudely interrupted by three crappy film recommendations knows this is a CEO who is way more Bill Gates than Steve Jobs.

Of course, this short pitch doesn't even come close to telling the entire story of Netflix. You're in luck, though. The Fool's brand new premium report on Netflix tells all sides of the story for one of the most compelling tech companies in the world. You can grab your copy now, which comes with free updates for 12 months, by just clicking here.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.


Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 06, 2013, at 7:43 PM, bubbler101 wrote:

    the plain and simple is that the stock is simply priced way beyond its real value, and realistic future value. In order to justify this price you have to basically resort to some some of fraudulent line of reasoning.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2296408, ~/Articles/ArticleHandler.aspx, 10/25/2014 4:14:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 6 hours ago Sponsored by:
DOW 16,805.41 127.51 0.76%
S&P 500 1,964.58 13.76 0.71%
NASD 4,483.72 30.92 0.69%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2014 4:00 PM
NFLX $385.02 Up +1.98 +0.52%
Netflix CAPS Rating: **
AAPL $105.22 Up +0.39 +0.37%
Apple CAPS Rating: ****
AMZN $287.06 Down -26.12 -8.34%
Amazon.com CAPS Rating: ***
CMCSA $54.26 Up +1.04 +1.95%
Comcast Corp CAPS Rating: ***

Advertisement