Motley Fool Money is a one-hour weekly business radio show syndicated to radio stations across America. The latest show features an interview with film critic Nell Minow about the just-released Wall Street: Money Never Sleeps as well as our analysts discussing what the week's business news means for investors.
Chris Hill: On Thursday, Blockbuster filed for bankruptcy. For those who like business news with a healthy dose of irony, Thursday was also the day that shares of Netflix
Seth Jayson: So sad to have to get out of traffic to drop those movies off at Blockbuster.
James Early: Just when I made it a 20% portfolio allocation, too.
Hill: What do you think is the threat to Netflix now, or have they vanquished all comers?
Jayson: Well, I think the threat to Netflix may ironically be Netflix. I still don't know how their online movie delivery business scales because for folks who are not interested in the goofy parts of Internet delivery, it is not like broadcast where you send out one stream and it costs the same whether 10 people listen or 10 million. It costs more; it costs a certain amount of money per listener or per viewer. I use it all the time, but I am not sure Netflix makes a lot of money doing things that way, and that is the direction things are headed, so I have no idea why Netflix shares are as pricy as they are, but I know exactly why Blockbuster went bankrupt.
Hill: Is there another Blockbuster out there? Is a company like GameStop
Jayson: GameStop is still OK because people buying games still want, they want the disc and online delivery of games; games are pretty huge now. They take up gigabytes and gigabytes, and it takes awhile to download that, so I think they are OK for a while.
Hill: The Wall Street Journal reported this week that while the Nasdaq Composite Index has been relatively flat this year, there has been one area that has been on the rise. That is closely held Web start-up companies. These escalating valuations can be seen in the secondary market where investors can buy and sell shares of private companies like Facebook and Blippy. Yes, Tim Hanson, Blippy. It just seems like this is dot-bomb era all over again with some of these valuations.
Tim Hanson: I mean you look at it and it seems like the mantra here is, "The less I know about a company, the more it's worth to me." (Laughter.) I was looking through the survey of results, and they were saying Facebook is worth somewhere between $20 billion and $30 billion. Twitter, 1 billion. Blippy, $50 million. I don't even know what Blippy is.
Hill: Oh, you're going to know. It's going to be huge.
Hanson: But is it worth $50 million?
Jayson: I think Blippy is like Yelp, isn't it? Or every other site? Isn't it a review site?
Hill: I think it is a review site, yeah.
Jayson: So it is like every other Internet site, pretty much.
Hanson: I am sure that will serve them well over the long term. (Laughter.) But this relates back to the Microsoft story we were talking about earlier where these big tech companies can get money very cheap, and what that means is that I think people are speculating that companies like Microsoft
Seth Jayson , James Early, Tim Hanson , and Chris Hill may own stocks discussed during the course of the weekly radio show, which you can listen to on radio stations across America and on iTunes. You can also follow the show on Twitter. To see the stocks they own, follow the links above to view their profiles.
Microsoft is a Motley Fool Inside Value pick. Netflix is a Motley Fool Stock Advisor choice. Motley Fool Options has recommended writing covered calls on GameStop. Motley Fool Optionshas recommended a diagonal call position on Microsoft. The Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.