Netflix (nflx) Stock Research
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Company Description: Netflix, Inc. operates an online movie rental service servicing approximately 7.5 million subscribers in the United States. Through various plans, Netflix subscribers select DVDs online, receive the selected DVDs in the mail, and then return them using provided prepaid mailers. Netflix does not provide deadlines or charge late fees. After a DVD has been returned, Netflix sends the next available DVD in a subscribers wish list. The company has also boasts a library of over 6,000 digital films and videos which subscribers can watch instantly online as a free service to DVD subscription plans. Netflix now offers a streaming only plan without the DVD subscription service. Update
Discretionary Industry Analysis: The consumer discretionary industry includes companies whose sales come from consumer discretionary income purchases. Discretionary income = gross income less taxes and necessities such as rent, mortgage and food. Discretionary Trading Strategy: The consumer discretionary industry tends to be very sensitive to economic cycles. Look for undervalued discretionary investments during economic recessions when stock prices are low and sell discretionary investments during the late stages of a bull markets when stock prices are high. The global economy is currently in a recession, therefore, it is the perfect time to purchase consumer discretionary investments. Upward sloping stock charts and financial news may indicate a selling opportunity while the opposite means that stocks are becoming undervalued.
Industry Sub Sector: Technology. Netflix is a dominant industry leader due to its personnel, experience and financial strengths. Industry leaders are difficult to compete against, which decreases business and investor risks. The market is quickly expanding. This lowers the threat of direct competition and increases Netflix's profits.
Market Challenges: Opportunities: Solutions:
Strategy: Netflix targets customers who have very specific needs and with solutions that are difficult to replicate. (read more). Competitive Advantages: One of Netflix's most valuable competitive advantages is the wide support and adoption by hardware manufacturers. Netflix software is built into many video game consoles, set top boxes, and televisions. This makes it very easy for owners of these electronics to integrate Netflix into their entertainment repertoires.
Complicated financial statements lower Netflix's value, because it increases the risk of fraud and lowers investor confidence.
Current Revenue Sources: Future Revenue Sources: