More Market Volatility and Netflix

netflix stock buyingStocks have rebounded quite nicely since September's trading woes. Two weeks ago, trading was looking quite grim with not a lot of optimism. However, markets have had some good trading days and bounced back. Beware of falling into the trap of going long too soon. There still remain a lot of discouraging signs in the market that could push for another sell off. Consumers are sensitive and just the slightest negative pressure can turn optimism into pessimism.

One big thing to keep eyes on is the VIX levels. We have seen quite the spike in the VIX (volatility index of markets), which mostly leads to downward trading in the long run. We saw record VIX levels in 2009 when markets reached lowest levels. The theory is that the more uncertain traders are, the more sensitive and volatile they trade. In fact, just in the past two months, we have seen several +/- 1% Dow trading days. It has come down a bit this past week, but still remains in high levels.

After months of upsetting their subscribers, Netflix announced this week that they would not be splitting their streaming and DVD company up. Recently, Netflix changed their subscription prices, charging significantly more for those wanting to continue receiving DVDs. In addition to the price change, Netflix announced their plan to divide the company and retain the streaming service under the Netflix name and create a new company (Quickster) to house the DVD business line.

Customers responded to this move with even more anger for the company, which resulted in some loss of subscribers. After a few months, Netflix finally gave into the complaints and hacked the Quickster company, keeping the two businesses under the same roof.

Throughout the duration of this debacle, we have seen a tremendous drop in Netflix's (NFLX) stock price. After reaching highs of well over $300, the stock almost reached the $100 mark this past week. Investors have begun to question the decision making ability of the company's leaders and whether or not they have the ability to continue strong growth.

Additionally, Amazon is starting to show its big, ugly face around the corner as a massive competitor of Netflix as they just recently announced their new Tablet as well as their growth in streaming content for their Prime users. This is another influencer for selling NFLX.

Personally, I believe the stock has been a bit oversold at this point. Much of the reaction has been emotional, which tends to reach far beyond the point of logical valuing. The point is, Netflix still controls the largest amount of streaming media content, which will always bear the largest subscription base. If Netflix can keep this trend, they should continue strong growth. I threw some of their stock in my account on Monday. Happy Trading.

9 comments:

  1. MCX Tips Says:

    Hmmmm, I am strongly agree with you. Volatility may continue ahead...

  2. Best Penny Stocks Says:

    Really a very good information that will be so helpful.

  3. Penny Stock Investing Says:

    I have always favored quality value stocks over quality growth stocks. Simply because of the extra margain of safety that value investing gives you compared to growth stock investing. Growth stock investing is all about future expectations. Value investing is about the current value of a stock. This does not mean that their are not any growth stocks that are not great investments. Stocks like netflex generally trade for much more than what the current value of their business is worth their is always great risk if a company like netflex fails to live up to their expections as was clearly demonstrated most recently in the price action of the stock. Stocks like netflex live or die based on how they perform quarter to quarter..

  4. Stock Tips Says:

    Volatility plays a vital role here which makes us aware & more confident in earning money with great stock cash tips...Nice blogging here I got which really helps us to get more update.

  5. QUALITY STOCKS UNDER 5 DOLLARS Says:

    A very interesing post.

  6. Nifty Future Tips Says:

    Well done to this blogging which enables us for the creation and the management of financial markets to generate the best possible benefits...

  7. devil jiang Says:

    Bloomberg Feb 2. Princeton Economics' Martin replica wathces Armstrong is still rotting in New York's Metropolitan Correctional Center according to the rolex replica Bureau of Prisons, more than seven years after being jailed on civil contempt charges gucci replica for declining to provide details of where he stashed the remnants of as much as $1 billion of mostly Japanese investors' chanel replica capital, and six months after pleading guilty to a related securities fraud replica handbags charge.

    Magnum opened a fund based on Armstrong's investment hermes outlet model in mid-1998; a year later, the Commodity Futures Trading Commission pulled the plug on Princeton Economics' fendi outlet operations, alleging the concealment of "substantial trading losses." Republic New York Securities - which had since been taken over by HSBC rolex submariner replica - paid over $600 million for its role in documenting and distributing the fraudulent net gucci replica asset value calculation in a 2001 settlement with the CFTC and the US Securities and Exchange Commission.

  8. stock trend Says:

    I’ve lately began a blog, the data you provide on this site has helped me tremendously. Thank you for your whole time & work.

  9. Harry smith Says:

    "More Market Volatility and Netflix" Really awesome post. But its my humble request is please update some more great post. At the end just i say Get Heavy duty Rubber Matting from http://expressrubbermatting.co.uk/rubber-matting.html