Netflix

[smurff]

Netflix is an example of a company that I had considered holding in my VP simply because I liked them.  Then they made two decisions--60% price increase with no increase in service, the Qwikster nonsense--and I, along with millions of other subscribers, put an end to the fun,  jumping ship in two massive waves of cancellation. Apparently the CFO jumped ship, too, before all this came down.

Early this past summer, analysts bragged and boasted about Netflix, saying they were the new Apple.  That alone should have been fair warning.

July 13, the shares sold for nearly $300, a good $298.73.  After hours today (just over 3 months later), the shares  are selling for $88.75  as of 7:59 PM EDT.  (The close was $118.84, so they lost more than $33 after hours.)

I'm glad I didn't add them to my VP.

Anyway, the Netflix mess is an illustration of why HB did not recommend shares of individual companies for the PP.  Too many weird decisions by a company's execs can snowball into sadness for the shareholders.  And as they're still doing stupid stuff, who knows what the price will be by the end of the year.  :(

[dualstow]

Indexing is a wonderful thing, especially when you think about Netflix.
I love my Vanguard S&P fund, my VTI and my VBR.

I must confess I have individual stocks, too, but I already had 50-60 of them before discovering the pp.
It's hard to get rid of them because the dividends get an annual raise and because they don't suffer like bank stocks. (Not that I didn't also buy bank stocks. I did buy them years ago, and they are now virtually worthless).

Adding stocks with no dividend like NFLX?  Yeah, it does seem like a big gamble. I guess that's why Harry always succinctly defined the vP as money you can afford to lose.

[AdamA]

I think the same kind of thing will eventually happen to Apple and also Google.  

They're great companies, but the number can't go up forever.  

[smurff]

As I'm reading your post, Adam1226, there's an ad for Netflix ("Instantly watch movies FREE TRIAL!  Click here>") at the bottom of this page.

They're watching us!

[Jan Van]

Then again, maybe this is a good time to pick some Netflix shares up. The selling might be a bit overdone.

[Odysseusa]

For my Variable Portfolio (VP), I choose stocks that provide dividend yield of 2% to 4% annually or 0.50% to 1.00% quarterly with payout ratio of less than 70%.


Unfortunately NFLX does not issue quarterly dividend.


My personal preference for dividend stocks.

Countries: USA
Dividend yield: over 3%
Payout ratio: under 70%
PEG: under 1

[AdamA]

Then again, maybe this is a good time to pick some Netflix shares up. The selling might be a bit overdone.

I agree, and Netflix may continue to be a great company, but the stock price will eventually have to stop going up so rapidly. 

[Lone Wolf]

Netflix is an example of a company that I had considered holding in my VP simply because I liked them.  Then they made two decisions--60% price increase with no increase in service, the Qwikster nonsense--and I, along with millions of other subscribers, put an end to the fun,  jumping ship in two massive waves of cancellation. Apparently the CFO jumped ship, too, before all this came down.

I've been a subscriber for 11 years so it's really been horrifying to watch.  We came close to canceling but decided to keep the streaming (really just for my benefit, since my wife can't find anything to watch on there.)

I have a friend that bought them a few days after the plunge when the Qwikster decision was announced.  His reasoning was that the decision was so stupid that it would be reversed, erasing the "Qwikster" losses.  Impressively, he was right about the reversal.  Clearly, though, investors are just plain freaked about this rash of awful decisions.

And the market really didn't like that earnings announcement.

And as they're still doing stupid stuff, who knows what the price will be by the end of the year. 

Oh no, what new stupid stuff are they up to now?

[MediumTex]

The difference between Apple and Netflix (among other things) is that Apple at its recent peak was only selling at 16 times earnings, while Netflix at its peak was selling at 80-100 times earnings.

I agree that Netflix has really done some dumb things these past few months.

[smurff]

And as they're still doing stupid stuff, who knows what the price will be by the end of the year. 

Oh no, what new stupid stuff are they up to now?

Just an extension of ongoing stupidity.  They are expanding to countries like Ireland and the UK, apparently without good plans, while these diverse markets are in the midst of hot competition from Sony, LoveFilms, even YouTube.  (When they started up in the USA, their only significant competition was anemic Blockbuster and the Public Library.)  They introduced their service to Latin America in September, around the same time they announced the changes that led to the massive customer defections.  (Violates the rule about doing more than one big thing at the same time.)

They don't plan to try to get back any of the 810,000 subscribers who left them.  (If they tried, this would be an almost trivially easy thing to attempt--and it might work.)  They've also decided that they will not roll back any of the price increase despite their decision to not go the Qwikster route.