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Another Frightening Development for Short Sellers of Netflix Stock

By Tim Beyers - Apr 24, 2013 at 9:42PM

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A former News Corp. executive bids a paltry $500 million for Hulu.

Tough as nails short sellers have paid a dear price for betting against the streaming sensation. Netflix (NFLX -7.02%) stock is up more than 135% year to date.

Will the rally end soon? Not likely, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova in the following video. Weakness at Hulu, one of the company's chief rivals, suggests that Netflix's competitive advantages are more durable than the bears believe.

Reuters reports that former News Corp. (FOXA) President Peter Chernin has bid just $500 million for Hulu, which helped to create in 2007. Walt Disney (DIS -4.00%) and News Corp. control Hulu as of this writing. Comcast also has a non-voting ownership interest.

At the very least, Tim says, the bid suggests Hulu's content relationships are losing value even as Netflix and (AMZN -7.16%) grow their respective streaming catalogs. Amazon, in particular, now claims to offer more than 38,000 movies and TV episodes via its Instant Video service. The e-tailer has also followed Netflix into the business of creating original series.

Which streaming supplier would you bet on now? Please watch to get Tim's full take, and then leave a comment to let us know whether you'd buy, sell, or short Netflix stock at current prices.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$177.19 (-7.02%) $-13.37
The Walt Disney Company Stock Quote
The Walt Disney Company
$104.30 (-4.00%) $-4.34, Inc. Stock Quote, Inc.
$2,142.25 (-7.16%) $-165.12
Twenty-First Century Fox, Inc. Stock Quote
Twenty-First Century Fox, Inc.

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