Thursday, September 3, 2009

Starting Netflix

I started Netflix (NFLX) position today. There are several reasons for my decision.

I am a happy customer. They have great selection of movies, service is excellent, subscription price is unbelievable low.

Business model is unique. Blockbuster tried to do the same and failed. Rental kiosks serve different customers, they are not big competitors.

Company has a great financial position. Balance sheet looks great, earnings are growing.

The main asset of the company, however, is Netflix Culture Manifesto. When most companies treat their employees like replaceable parts at best and often like dirt, this company understands that great people make great company.

Of course, opportunity helps. I waited for an entry point and here you are! YouTube deal with movie studies is not certain, wouldn't happen for months. It also doesn't even touch main reason people subscribe to Netflix: great selection of movies on DVDs and great service. Web content delivery might be important in future, Netflix makes money from DVD rentals now. But YouTube news pressed NFLX down. Good entry point.

YouTube belongs to Google(GOOG).

Full disclosure: at the time of publication author had long positions in both NFLX and GOOG. Positions can change any time.

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1 comment:

Anonymous said...

I am also long in NFLX based upon their fundamentals, which are all the right reasons. I am not a seasoned investor but want to hold strong companies that have strong future potential. I've held NFLX through news like the Google deal yesterday and it seems to always take the "reactive" drop because, quite frankly, people don't know what they are holding in their portfolio. Yes, I do have a price target in mind for a sell point, and yes, I am not an emotional investor. I'm in it to make money. NFLX is an attractive addition to the portfolio at its current price levels. I would buy more but I'm all in right now. And when the time is right and my sell price is there, I will look for another great deal like NFLX.