Based on the aggregated intelligence of 170,000-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

$9.4 billion


Internet retail

Trailing-12-Month Revenue

$2.01 billion


Founder/CEO Reed Hastings
CFO David Wells

Return on Capital (average, past 3 years)



$256.8 million / $236.7 million

1-Year Return



Amazon (Nasdaq: AMZN)
Apple (Nasdaq: AAPL)
Google (Nasdaq: GOOG)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 19% of the 8,433 members who have rated Netflix believe the stock will underperform the S&P 500 going forward. These bears include All-Stars Geofiz and ikkyu2, both of whom are ranked in the top 5% of our community.

Two weeks ago, Geofiz wrote that the Netflix bear case all boiled down to price: "Great company, but seriously overvalued at this time. Up to this point, [Netflix] has had the scene pretty much all to itself, but the Apples and Googles of the world cannot and will not allow that to continue."

While most Fools agree that Netflix is truly a great business, it's the stock's lofty price tag that our community seems to have problems with. With cash-rich tech titans Amazon, Apple, and Google only looking to increase their digital streaming offerings, many question just how well Netflix's 70-ish P/E discounts the competitive risks.

CAPS All-Star ikkyu2 explains:

Where's the moat? Streaming services like Netflix, that aren't Netflix, can waltz right in and take share from Netflix, eroding their margins. The company's valued like it had a natural monopoly. It hardly does; Netflix streaming is a great technology, but in the grand scheme of things there's not that much content available. If a company with experience contracting with oldmedia companies (Apple?) ever makes good on Qwest's old "Ride the Light" ad campaign, "Every movie ever made, instant on demand," they'll make Netflix look like amateur hour.

What do you think about Netflix, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Netflix, Amazon, and Apple are Motley Fool Stock Advisor picks. Google is an Inside Value and Rule Breakers recommendation. The Fool owns shares of Apple and Google. The Fool's disclosure policy always gets a perfect score.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.