- $304.79 Netflix’s stock price on July 13, the day after they announced their unpopular price changes
- $76 Netflix’s stock price as of this morning; it’s down more than 75 percent since July alone source
» How hard will moving forward be? During yesterday’s earning report, Netflix’s CEO, Reed Hastings explained off his company’s tough year like this: “We made a couple of big mistakes this year. It’s up to us to own up to those mistakes and to move forward.” But will owning up to those mistakes be enough to stop the bleeding amongst investors? A 75 percent drop in three months — when your stock is worth more than $300 — is just insane. It dropped 36 percent today alone. If you think Netflix is going to bounce back, though, now’s the time to buy their stock.
I was at Amazon when the stock price was at $13 and at $100. Jeff Bezos would quote Ben Graham, “In the short term, the stock market is a voting machine. In the long term, it’s a weighing machine,” and he would also say “when the stock loses half it’s value, we didn’t get half as smart, and when the price doubles we didn’t get twice as smart.”
Netflix has a widely known brand, a core group of customers who will never leave, and a very competent CEO. Hollywood could starve them to death with licensing, but I doubt it. Hulu’s recent inability to sell itself is a clear sign that the corporations that own Hulu are operating out of fear for their own businesses than what’s best for Hulu. I think Netflix can definitely out-execute here. If you are a long-term investor, I’d buy Netflix today. (If you’re a casual short-term investor, why are you buying stocks at all?)
(Source: shortformblog)
