Yeah lol at NFLX being acquired. Nobody who could make anything remotely resembling a good case for buying it (Off the top of my head it would be a merger of equals between them and some other massive media company) wouldn't be able to get the merger approved.

Apple has a massive wad of cash so tech/finance writers who need clickbait titles always roll out the Apple will acquire XXXXXX headline on an annual basis

Tesla, Netflix, GoPro, Snapchat, Vimeo etc etc

Netflix makes zero sense.

Beats never made much sense either.

I cant imagine any company acquiring netflix at this price. certainly not cook...he doesnt have board approval for big moves let alone one like that. shareholders would revolt at such a high price.

when I look at companies like this...I look at the board and the impunity of their leader. If they are able to raise cash or spend thier cashflow without a lot of pushback from the board...they will grow indefinately. when that dynamic changes watch out.

the music will stop and some wont have a chair. but declaring the music will stop is kinda pointless unless you know when.

The really fun thing about this post is how many names I could substitute for NFLX and the math would be about the same. This is just how people value growth companies... Which is probably why neither of us have probably ever bought one.

What could you substitute for Netflix where the math would remain the same? I can't think of one big cap that's equally horribly overpriced even if everything they want comes true, even at the price when ahnuld did his valuation.

If you rode this beast up, congratulations, but it's sell time here at $264. You've got a few more quarters before Disney jumps in in a big way, gutting Netflix and bringing it back to $40 or so.

Let me put it this way. Disney's offering - which will have superior content and which they will aggressively underprice for years to win the war, given their huge profit and bankroll and zero extra content costs - needs to steal a mere 2 million subscribers/quarter from Netflix out of 150 million, for Netflix to go into terminal decline. Think about that number for a second. 6 million globally out of hundreds of millions. Those numbers put Netflix in terminal decline. You think Disney won't do this? I would switch in a heartbeat to Disney streaming, given the chance.

If you're holding here you're sitting on top of an avalanche. Might the snow pile a little higher? Sure. But even normal market forces are >50% to quickly bring this back to $200 or less this year. It's too high here at $264.

Howard - I think it's been demonstrated that the buyout upside is too small to consider. Everyone here is in agreement. You should not base your investing decisions on it.

I'm a value investor which is code for 'I've been in cash since late 2016... welp!'

I already listed one name in this thread: Tesla. And the fun part is that I suspect you agree with me.

You're right that it's one of the most overvalued names with a market cap north of 50B, but that's because there aren't that many growth stocks with that kind of market cap.

I think YELP is actually more overvalued as is ATVI.

EDIT: It's also important to note that I'm the furthest thing from a tech investor you'll ever find. Just because I'm thinking about doing a startup doesn't mean I would ever invest in a big cap growth play. That's just paying off some other persons bet IMO.

Netflix valuation is far worse than Tesla on any future likely metric. It's not even close. Tesla at least has a shot at decent revenue and P/S of 1 in a few years, as well as other product lines that could (implausibly) take off, like energy products.

Netflix has nothing in the pipeline except slowly growing revenue as a streaming service, in which it has a current monopoly globally that will soon end.

I disagree. I think Tesla stock has a very good chance of being worth 0 in 5 years. (I will be first in line to buy the new shares when it comes out of bankruptcy just like I'll be buying TSLA when things look really bleak towards the end to make sure I profit off Musk pulling it off at the last second. I like the company as a asymmetric play just fine) I don't think the same can be said of Netflix. I guess it depends on how you see the trade happening.

I agree that Tesla has a higher ceiling but I think their chances of getting that ceiling are pretty improbable. By contrast Netflix is already a major company with substantial revenue. What if Ahnuld is wrong and they get to 80% adoption nation wide? What if they can raise the price of service to 30 dollars per month?

There's room for a better best case on Netflix than you guys are giving them credit for. Again I think a lot hinges on how good 'Bright' was for NFLX internally. Yes I know they are making a second one, but honestly I think they were going to greenlight that to balance their range no matter what.

We'll know it was a smash hit for them when they suddenly announce 4-5 more big budget summer movies with bankable stars like Will Smith.

EDIT: NFLX doesn't need to be a monopoly. I subscribe to Netflix, Amazon Prime, HBO Now, Hulu, and Showtime through Hulu. When American Gods comes around again I'll briefly be a Starz subscriber. This is a space where people can buy more than one option, and nearly all middle class+ people will subscribe to every single one that provides them with value.

SECOND EDIT: Please don't interpret this as me saying Netflix is a good buy. There are very few stocks right now that I think are anywhere in the neighborhood of fairly valued, so much so that I haven't even been looking for new opportunities. I'll be back when the market crashes. I also think Netflix's current valuation is lolbad. I just think that it's in the same class of lolbad as other stuff that I also would not buy. I don't think they qualify as some kind of special paragon of terrible.

THIRD EDIT: And the reason why a guy like me isn't short stuff right now is that lifetime I am down a lot of money on shorts. I don't do those anymore. In fact my record would be AMAZING if I had just never shorted anything ever. When you discover that a particular type of bet is costing you a lot of money you just stop doing it. At least that's what I did.

Totally agree that the competition argument in complete nonsense. Netflix plus 3 or 4 other bundles will be the new normal. And Netflix is the clear leader.

Shorting never made any sense to me. Since its creation the stock market has risen. Sure there are bumps and cycles and downturns but the one constants is eventually it goes up. Its much easier to ride that wave with its 1929s, 1987s and 2008s and HODL as the kids say than it is to try and "outsmart" it by getting short. NFLX may or may not be grossly overvalued but it is a freight train you shouldn't feel comfortable stepping in front of. The mindset of the short always baffles me since it goes again the path of least resistance. Timing these kinds of things is basically impossible but there is still generally some room to move once it does actually turn over. Frontrunning that turnover point is either pure luck if correct or extremely painful if wrong.

Well, neither does playing news, and I crush your returns doing just that.
This would be relevant if we were talking about shorting SPY. This is a thread about a specific stock. Lots of specific stocks either go bankrupt or drop to a low level before they're acquired, which is almost the same thing. The index only include those stocks that remain in the index - to which new ones are added every year. This analysis is just hokey. Again, fine as general advice for an index.
How is selling out a stock optimistically valued at $40 when it's at $260 "stepping in front of a freight train"? I'm truly baffled. To me that's getting out of the way of a freight train.

Soros made a fortune shorting - 10s of billions, crushing most longs. jb514 from these forums does extremely well shorting many dozens of stocks a year. Your personal credulity against shorting is nothing other than that - your personal credulity.

Regardless, the discussion here is whether you should sell at $264. You obviously should.

How long have you been trading? Long term shorting costs a fortune in a bull market and makes a fortune when the bear market hits. We're 9 years into a bull, so if you've been trading less than a decade, you probably don't have a rational view of shorting based on your experience. One of our traders here who I won't name goes near broke in prolonged bulls and makes 6 figures starting from thousands in bears.

By the way, a short has two parts - an entry and an exit. If you've lost a lot of money shorting, it doesn't mean your entries were bad.

Let me put it another way. How would you do, historically, if you shorted all the > 100 P/E stocks whenever you got more than 8+ years into a bull and held until they returned 50%?

Getting out of the way of the freight train is not being long OR short. I've felt the way you feel about NFLX about nearly the whole market for 2 years. Big companies are almost never worth more than 20x net profits + NAV and that's for the best stories that exist (NFLX does qualify). If I had gotten short when I started feeling that way I'd be insolvent now.

I've already drastically underperformed the SPX for the last 4 years because of having growing piles of cash sitting around. I would have lost every dollar (and then some) that I shorted if I had.

I think that puts sometimes have merit when you're looking at a stock like NFLX because you can limit your downside to fixed number and then fire and forget with tiny fractions of your portfolio. The problem inherent to this is that in the long run these types of securities lose a significant amount of money.

For guys who live on fundamentals with a long time horizon you pretty much need to find fraud to justify a short.

I've been at the very least paper trading since the late 90's. Most of my investment philosophy was formed by watching stuff with really high valuations fall off cliffs twice.

I am not good at predicting when things will fall. I'm pretty good at picking out the really undervalued stuff and getting risk free upside in a bear market. I like to be long ugly stuff quite a bit. Buying stuff that just had a major disaster is literally my favorite thing in the world.

EDIT: I also last actively traded for substantial money in 2013. I decided I might be a fish on a heater and didn't have access to large pools of money so I decided selling my own abilities was a better way to go. If you took what I earned last year in income and compared it to my net worth I did roughly 25% last year risk free so I feel pretty good about that choice. I don't think I could handle the stress of being heavily exposed (long or short) to this market combined with the stress of my job (my job is really stressful lol).

Also the last time I shorted NFLX I lost five figures. I vividly remember that moment because it's roughly when my resolve to make a go at it as a trader crumbled. I kept going half heartedly for a while but I was done. I'll get back in heavily when I can buy good companies at good prices again.

EDIT: I also keep thinking about starting a trucking company and keep putting it off. This is definitely ironic because hordes of people vastly less qualified to run a trucking company than I are running lemming like to go open them. As I get older I've found that my desire to protect what I have climbs and my desire to get more trends towards 'how to generate a large amount of money with zero risk'. I didn't know that was possible when I was younger... Now I know it's how you get rich consistently.

Yeah we heard that story 100 points ago NFLX will turn over sometime as nothing just goes the way it has infinitely. When the market eventually corrects it may correct more. But timing and trade management are the key because otherwise you just get buried.

I can definitely see an argument for getting short Tesla and Netflix every time the market has a really bad day (and back out of the trade the second the market starts to rebound) on the off chance that the selloff is nigh.

Nobody in this thread I think really thinks NFLX is going up long term... it's the short term in between that makes that information hard to play.

I have never made a case for buying it, just think its ridiculous to try and pick tops in such a strong trend. Picking tops (or bottoms) is suckers game as we all know the market can usually stay irrational longer than you can stay solvent stubbornly fighting it.

This is not the argument for why Netflix will turn over. NFLX will turn over because it is vastly overvalued compared to even its most optimistic end game.
There's no "may" about it.
You're like a parrot. I really don't know if you're daft or just stuck in the habits of long experience, but you *must* have the understanding necessary to realize that the largest edge that following a trend can give you is necessarily fairly small - or everyone could be mega rich just from following trends since it is a simple algorithmic observation rather than a judgement call. Channels, for example, must add a very very tiny amount of information at best, or everyone would be rich algorithmically trading channels. I put this question to you and you seem not to grasp it.

I mean, I'm sure your way of doing things worked fine for you trading commodities, and more power to you and I enjoy your insights on that, but you're really out of your depth here and seem not realize it.

No one is going broke shorting NFLX (that's not even what's being discussed, by the way, merely selling it now before you run into the freight train of a correction) unless they're in for a big lot of their stack and cover without letting the thesis run.

If you're not making a case for buying, then you must find the EV of buying it to be low, right? In which case it doesn't matter whether you're long or short.

I mean, you don't really believe your own argument that it's a "strong trend", and that this means shorting is -EV, otherwise you'd buy.

You have a fear approach to trading rather than a rational one. Great traits for a man in the pits who printed money because he was a market maker and can capture the good side of the spread and thus merely has to stay solvent. Awful traits for either stock analysis or stock trading.

All your commentary seems to be "Waaaaahhh!!! I could lose money!!! Losing money bad!!! Don't go against the trend!!!" with no analysis or depth behind it.

People have that approach to poker too, they're called rocks and they grind out ok money sometimes. An EV approach to trading (and poker) is superior but it seems to be something that you're too fearful or habitual to contemplate.

Yeah, you win and I am not gonna argue with you anymore. Enjoy all of that alpha edge you get shorting uptrends. And if you don't think the algos are buying/causing those bounces off of trend channel bottoms who is? I still contend that buying dips in uptrends is the best approach to normal stock market investing.

I don't disagree with your last sentence. However, this isn't broad market investing we're discussing, like buying or shorting SPY - it's about a particular stock with particular traits at a particular price. If you don't want to analyze that and just say "strong uptrend, don't sell/short!" then fine, but that doesn't add much, especially when you refuse to be drawn on how much EV that entails or at what probability.

And all I'm asking from you is a rational argument on those particulars. You don't seem to have one, just weak-tight fear. This conversation is going down exactly like it does with rocks in poker.

Yeah because listening to a guy who's been completely wrong and doesn't even make the plays he's advocating is a great investing/trading strategy. Hahaha so good.

NFLX is a great short guys from $180-$200. Am I short personally? Nah, I play puts and make a fortune timing shorts in this markets. Hahaha hahaha

Was I afraid to short NFLX when you deemed it an "excellent short" back in November when it as about 185? Yeah I was And if any of the fish followed you then maybe they learned something.

I will gladly admit to being risk averse. Doesn't mean I don't take risk though. I approach stock market investing with a long bias for the long term be it etf's or individual stocks. Does every uptrend dip work out? No, but most of them do. In day trading I take plenty of risk but I have a quick trigger if it isn't working as no trade is worth going to the mat for. Stubborn opinionated traders are the absolutely worst traders. They believe they are right and won't let anything like a position running straight up their ass stop them. I have seen a lot of these guys blow out huge over the years. I trade very short term momentum. Going with the flow and riding the path of least resistance has always worked well for me.

Trading and investing are totally different animals though that just happen to live in the same jungle. There are a million ways to approach either and I am very open minded to that. I have approaches that work for me. This doesn't mean that my methods are right for everyone or the only way to be successful. You on the other hand have a vastly different approach and a feeling that any other approach is not only wrong but needs to be insulted because it isn't the way you do it.

On a separate note, this market in general will likely keep ripping as my weak tight self bought some put protection this morning. My last round of puts expired in Dec and I thought we would rip into the new year so I waited. Since I always get these wrong because I can't time a top they will most likely expire worthless. That would be fine with me