Tag Archives: NFLX

Tuesday Stock Market Expectations – Tuesday 4/26/11 — Don’t be fooled by the rally!

Posted by Jeremy F. - CEO on April 26, 2011 3 comments

HedgeFundLIVE.com —   Futures are up this morning. Once again in front of resistance.

Netflix was priced to perfection. It dropped nearly 5% after the close. With extremely light volume in the futures market, there is not much that can be read into yesterday’s trading action. Last week, the market went up on air and failed to break to new highs. Earnings do not seem to be the catalyst for that kind of a move. Bernanke press conference has significant downside risk to the market. In fact, I cannot see a positive reaction to what is a questionable attempt at transparency. Economic data does not reflect significant growth. It is mixed and seems very vulnerable. A minor slow down might have exponential impact on the overall economy. The thing that is most disconcerting is that there does not seem to be any realistic solution to the deficit crisis. There does not seem to be any solution to the unemployment crisis. The Middle East crisis is far from over. Syria may be the match that ignites an all out Shiite vs. Sunni civil war, as tanks are unleashed on civilians.  The dollar will begin to strengthen. It is inevitable. Simultaneously commodity prices will begin to contract. Demand for oil will deteriorate, as supply disruption has been contained, though geopolitical risks remain. China will stop building empty cities, and it will be years before Japan contributes to global infrastructure growth. Will Europe resolve its internal issues? It seems unlikely. European governments excel at procrastination. China has implied that it might bail out Spain. What? The global finance plot is getting so convoluted that the idea of investing on fundamentals has become an enigma, a legacy idea from a simpler time, an unachievable goal. The firm is short the major indexes and long financials.

CNN referred to Syria as the key piece to a regional Rubik’s cube. It is believed that nearly half of Egyptians want to end the peace treaty with Israel. Iran continues to agitate the Bahrainis revolutionaries. Italy will now aid France in its “No Fly Zone” mission over the sky of Libya. That is a real confidence builder. Gadhafi’s Bankers are bombing him.

The Gold rush is over. Silver was a bubble. Money will flow to the all mighty dollar. This will be followed by a sell off in oil that will create a domino effect in the commodities market. Commodities have underpinned the market for the last year. Technology is overvalued. Consumer related stock would be impacted by a flat lining economy. Banks with significantly improved balance sheets will be the primary beneficiary of all this dislocation.

Institutional buyers are on hiatus and will be until quarter end, two months from now. Fast money will continue to dominate the markets, but once they realize that the path of least resistance is down, it will take very little time for the S&P Futures market to make its way back to 1253.

Perhaps the most compelling argument for a sell off is the indifference that main street has started to feel for Wall Street. The confidence is broken and with it will go the market.

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Stock Earnings Ahead: A few names for tomorrow’s trade

Posted by Mark Moskowitz on April 25, 2011 1 comment

This week is going to be very big for earnings, although the action today was more like a sleepy August summer Friday.  Total volume of Spooz June Contracts was a shade under 600,000 and there was no action in site.

After the bell today, NFLX and NUE reported, NFLX stock was down after market and NUE stock was lightly traded although a good report signaled the potential run for commodity stocks.  My old fave, AKS reports tomorrow, with STLD earnings already out and showing decent numbers, AKS could follow suit.  Important resistance on AKS is $16.65 and support lies around $15.85.

I think it is important to not read anything into the action today due to the light volume following the Easter holiday, which most of Europe had an extra vacation day today.  I will note that I thought technical levels held up extremely well, 1328 being good support, then 1333.25 held up as resistance in the afternoon, clearly there just was not enough volume to push through important levels.

There were stocks that did well today, MCP, DANG and VMW were all up over 5%, names I owned on Thursday and traded a bit of today.  The best lesson from today is to be patient, wait for a great setup to show and stay focused on that.

I have a feeling, and I stress feeling that GS is going to make a strong up move tomorrow.  I like the action today holding a key level at $151.17, then finishing above some intraday resistance at $152.10.  My target here will be $154, then $155.50 if it can get through there.  I will also watch JPM and BAC in that sector.

CSCO, NVDA, YHOO and BRCM have my attention for long side tech plays, while I am watching $22 on INTC to get short, MSFT also looks like a short candidate.   I most likely will trade NFLX a lot and from both sides tomorrow, $234 is support, $228 after that,$245 and $251 is nice resistance.

I believe you want to keep your expectations muted until the Fed is done on Wednesday.  Thank you Dean M. for alerting me to the “new” way of reporting their decision starting a 12:30 pm on Wednesday with a press conference with Ben Bernanke at 2:15 pm.  My gut usually tells me that when you want to change policy without people knowing it you change the way you deliver the news.  Are we setting up for no more QE, a synthetic rate rise?  I do not know but it smells like it.

Ok, a lot to digest from a humble (ok, not so humble) technician so get out there and have a great trading day.

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Earnings Preview: 4/25 and 4/26

Posted by Jeff T. - Equities Trader on April 25, 2011 No comments
HedgeFundLIVE -  

4/25 - PM

 4/26 - AM
ACGL PBNY ACI KNOL
AEC PCL ACPW KO
AGNC PPD AHGP LCAV
AMP PRGX AKS LECO
BXS RCII AMED LII
CHE RGA ARB LMT
CTGX SFG ARLP LO
CYBE SONO ASH LRY
DEL SWFT AVX MHP
EFII UCTT CBZ MNI
EGBN UIS CE ODP
ELX USTR CMI PCH
ESRX VECO CNC PEBO
FDEF WCN COH PNR
FIBK WIBC CPLA PVTB
FNB WPP CRDN ROP
GLF WRB CRS RYN
HLX WWD CSL SAH
HMA CTB SBNY
HSTM ECL SPAR
HTLF F STBA
HURN FMER STL
HWAY GPI TBBK
ININ GRA TFX
INSU GSBC TKR
JJSF HSII TLAB
KND HSP UA
LPLA HSY UPS
MAS IACI UTL
NARA IIVI WAB
NBTB IMN WAT
NFLX ITW WDR
OMI JAKK WTI
JEC
KCI

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FRIDAY MARKET EXPECTATIONS 4/15/11 — The Market Continues

Posted by Jeremy F. - CEO on April 15, 2011 No comments

HedgeFundLIVE — Market expectations are as follows…

Yesterday was the start of things I’ve described in my previous blogs over the last month. A test of the 1300 level held.  With that said, earnings season is far from over, and a continued slide in commodities is a very real concern. It is very possible that we trade a range of 1300 – 1320 for the rest of the month, as many professionals will be taking time off for the holidays. The banks have found a comfortable level and Goldman looks particularly attractive at 154 – 155. They will survive. Inflation may hold steady, but ultimately that may actually mean a short-term correction, as the dollar will show strength under those circumstances. Yesterday was the first real day air came out of the very high beta names. NFLX seems to be the most logical short as serious competition is on the way, and they continue to sign overpriced deals with studios, which will affect earnings. A miss by NFLX would be disastrous for them as well, like many overpriced Internet names.  A 1254 test and perhaps a low of 1225 would complete an appropriate correction after a tremendous run since the financial crisis. The long-term economic outlook looks good and I still maintain my year-end 1440, which may be even higher if there is a legitimate correction. As was written in my previous blogs, the employment picture is holding steady, but not improving, as the Government would like you to believe. The Obama administration makes me nervous, as he seems emboldened to take on Wall Street again. He seems to have limited concern over any real competition for election year. Keep your eye on 1321 on the S&P futures; a break above it would cause me to reassess the current thesis. In addition any serious corrections will be met by increased buying, as I had misread the investor position previously. The lack of institutional buying and abundance of fast money led me to believe that investors were leveraged and at least fully invested, but JP Morgan’s Deposit growth alters that assessment. At the same time consumer credit is growing and wages are not keeping up with inflation. Not much more to say. I need to go spend $60 filling up my car for a trip out to Connecticut with the family this weekend. There will be a lengthier blog over the weekend.

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The Future of the Video Streaming Industry

Posted by Mugatu on April 11, 2011 3 comments

HedgeFundLIVE.com -

Overview

The business of streaming video content has been expanding rapidly with an increasing number of companies, both large and small, joining the competition.  With 27% of Americans now streaming TV shows and movies, up from 16% in 20101, it is of little surprise that cable giants are facing the pressure of cord cutting as consumers realize the benefits of opting for streaming services over cable subscriptions.  Netflix, Hulu, and now Amazon, offer subscription models while others like Apple, Walmart, and Best Buy run on a pay per view basis.  The future of the video streaming business looks bright and offers many opportunities for players in this industry.

Comparison of Services: Netflix, Amazon, Apple, Hulu

A review of the streaming services that several of the major competitors provide is shown in Figure 1.

Figure 1

Netflix is certainly ahead of the game so far and does have a head start over most of its competitors.  In fact, 61% of movie streaming from January and February 2011 came from Netflix; meanwhile, 8% came from Comcast Video On Demand, 4% from DirectTV, 4% from Time Warner Cable, and 4% from Apple2.  Netflix’s subscriber base was 12M in FY09, which marks a 67% increase; its FY09 revenue was $1.67B, which translates to a 29% growth rate.

While Amazon Prime’s library of just 5,000 titles pales in comparison to Netflix’s 20,000, note that Amazon already has strategic relationships with content providers through its Amazon Instant Video.  As outlined in Figure 1, Amazon Instant Video carried 90,000 titles.  Moreover, Amazon can direct its spending efforts on licensing more content by using its core business to drive the growth of its streaming segment.

Future

Competing services are cropping up as companies attempt to profit from this growing industry.  Comcast has an Xfinity program that provides free streaming for most shows on its network to those who have a paid subscription.  Furthermore, Comcast offers rentals for shows and movies.  Sony has its own streaming services called Crackle through which customers can stream Sony movies and certain show for free.  Other companies are not much more behind.  Recently, Time Warner unveiled its plan to stream HD and 3D movies shortly after their theater release date.  Coinstar, which owns the Redbox DVD kiosks, has announced plans to offer a streaming service in 2H11.  Just last month in March 2011, Facebook entered the space as well by teaming up with Warner Bros. to stream movies on the ever popular social network platform for $3/movie.

Companies are not afraid to increase their spending on efforts to take advantage of the streaming business.  Netflix continues to spend heavily on content rights.  Most recently, Netflix acquired rights to stream all “Mad Men” seasons, which did not come at a cheap price; the company is said to be paying $1M/episode to Lion’s Gate.  Netflix is currently in talks to buy the rights to an original TV series starring Kevin Spacey for $100M.  To provide further context, Figure 2 details leaked figures of what Netflix currently pays to license content.

Figure 2

Google recently revealed that it will spend $100M on YouTube to revamp the site.  YouTube is also under way to develop channels that will cotain orginal video content.  These initiatives are in the U.S. markets alone.  Netflix currently provides streaming services in Canada and is planning for further international expansion in 2H11.  At the same time, Hulu is also focusing on expanding globally and has already identified the UK and Japan as markets where its model could work feasibly.  The attractiveness of the opportunities that the video streaming industry offers has left companies racing to gain an edge in this niche.

1 according to a Goldman Sachs Internet use survey
2 according to market research firm NPD Group on March 15, 2011

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Japan’s Devastation sends the US Markets into Panic - Morning Preview 3-15-11

Posted by Jeff T. - Equities Trader on March 15, 2011 No comments

The S&P 500 futures are down 2.5% in the premarket.  Some big cap names moving lower are C, GE, BAC, CSCO, F, INTC, and AA.

Advancers:

FSLR +6.5%: Renewables, waste management rise on Japan.

CLH +4.2%; SPWRA +3.8%; SOLR +2.6%; WFR +1.3%

MDSO +3%; 4Q earnings beat

NFLX +1.1; raised to buy at Goldman

Delcliners:

ALV -6.3%. Japan OEM exposure: JP Morgan 

CCJ -14%. Nuclear sentiment; DNN -21%, USU-11%, SHAW - 8%, AVL-9.7%

RIG -5.8%. Oil drops below $98-bbl; SDRL -5.1%

SLW-6.6%. Gold, silver drop. EXK-14%, AG-12%, PZG-11%

TMT Analyst Commentary

LED Industry checks are positive for Cree, Rubicon, Oppenheimer analyst Yair Reiner said.

Checks show LED BLU demand re-emerging, LED general lighting has strong momentum in Europe/N. America and parts of Asia, are positives for CREE, Reiner said

Sapphire prices holding up well, potential for price hike in seasonally strong 3Q are positives for RBCN, Reiner said

CREE short interest 19% of float, RBCN short interst 38%: Data Explorers

RBCN up 19% YTD, CREE down 27%

Veeco Instruments is undervalued by as much as 20%-25% and cash on pace to be $20-share of net cash by year end, JPMorgan analyst Chris Blansett said.

VECO valuation by cash is better than traditional earnings- based, Blansett said

JPMorgan rates VECO overweight, PT $75; 12 buys, 6 holds, 1 sell, avg. PT $56.50: Bloomberg Data

Short interest 31% of float, down from Sept. 16 high of 46%: Data Explorers

VECO up 11% YTD; trading above 50-, 10-DMAs, below 20-DMA

 

Citi Sees Chip Supplies Tightening; Watch TXN, FSL, MXIM, XLNX 

Citi says Japan quake will hurt semiconductor supply more than demand, with country accounting for est. 30% supply, 11% consumption.

Texas Instruments said after close it expects “some” loss of 1Q rev., more in 2Q, after substantial damage to plant in Miho, Japan (plant accounted for ~10% TXN 2010 rev.); Citi sees other cos. making similar announcements

Separately, Freescale Semi’s Sendai plant has ceased ops

MXIM, XLNX may also see production disruptions, Macquarie said in note yesterday

Gleacher says in long-term some chipmakers such as TXN may benefit as disruptions spur higher prices, more orders

In Europe, disruptions at competitors could boost ASML, Infineon, STMicroelectronics: Citi

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Wednesday Market Expectations - It Has Begun

Posted by Jeremy F. - CEO on March 10, 2011 2 comments

The Time Has Come - Hedge Fund Live

HedgeFundLive.com -

I am reposting my blog from yesterday as i believe “It has begun” , China is slowing down, Spain is downgraded and i believe we may see a print above 400,ooo on the jobless claims. Not good. strap in for another crazy day.

I have the biggest overnight short position I have had in nearly a month. I am very bearish. Odd, as I really was a perma bull. But I have always been the guy that saw things ahead of time. I have seen what is coming over the next couple of weeks for the last couple of months. We are on the verge. Take your money off the table; the risk reward is significantly in the hands of the bears.

The NASDAQ was not strong on Tuesday. It was weak. Did you not see the selling into every rally? Did you not see AAPL hit a wall? Did you not see NFLX struggle and AMZN sell into every rally?

Oil will rally overnight. It should. The Middle East is a mess. How naive can we be to believe that the Libyan civil war will be resolved in the near term? Are you deaf? Did you not hear that Saudi Arabia is outlawing peaceful protests? The day of rage is upon us. Oil will be trading at 110 next week.

The market is stuck in a fever pitch, soon to be broken by the realities that are staring us in the face. My aunt Bernice wants to know if I think Apple is cheap. Should she buy NFLX? Is JDSU going back to $300 a share? We have reached that insane moment that only occurs when the market nearly doubles inside of two years. We are in a frenzy. When you wake up from a euphoric dream, and reality sets in, depression is soon to follow. As the saying goes, “Plan A never works, Plan B almost never works. No one ever has a Plan C.” We are there and there is no plan C.

Anarchy is upon us. Greed and a blind eye have brought us here. We need to correct, to find ourselves back on the path. The New York Times front-page lead article “Rising Oil Prices Pose New Threat To U.S. Economy”-ignored. Page A14 “Prime Minister Urges Iraqis to Call Off Nationwide Protests”. Yes, we are in danger of reversing  years of effort as we begin preparations to pull out of Iraq in December. Newtown, CT, my home away from home is struggling with their local budget. They are lucky to be struggling, high profile municipalities are not struggling, they are doomed.

Win, lose, or draw, I have bet a significant amount on the outcome of Wednesday’s market. This is referred to as living on the edge. It is where I belong. It is where I want to be. One decision, to be able to judge yourself in a moment, comprehend self worth, is like no other high. It is reality. It is destiny. I no longer have the patience to review the reasons why I am bearish. I would rather discuss the psychology that allows one to make a bet. Not just a small bet. But a bet that can change the game. I understand the risk. The firm is up $52,000 on the month. Tomorrow we are either down $50,000 or up $200,000. That is the real life of a “Risk Taker”. It is not your normal life. It is abnormal. But it is a high like no other. It is a razor blade edge I walk. A reward far beyond every day expectations. The time for long winded blogs explaining my position are at an end. It is time to put up or shut up, and so I have. No more discussions about domestic issues. No more pontificating on geopolitical implications. I will write no more blogs till I have either won the battle or been forced to retreat. It has begun.

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Facebook vs Netflix

Posted by Kascey F. on March 9, 2011 2 comments

HedgefundLIVE.com -News came out this week that Facebook will give its users the ability to view movies by paying a small fee. With this news, Netflix investors looked for the closest exit because Facebook is once again making moves no one can stop. Netflix dropped almost 6% intraday losing $635 million in market cap value and since mid February, the stock is down almost 20%.

Five Day Chart of NFLX


Facebook makes their revenue, now, from three things: advertising, sending virtual gifts and buying credits to spend on games and other applications. With Warner Brother’s deal to stream it’s movies and the release of The Dark Knight to kick off the new era, it seems as though Facebook is unstoppable. This is definitely not a good thing for Netflix or any other movie renting company. Two months ago, Goldman Sachs invested $500 million into the company giving Facebook a value of $25/share. Now, only two months later, in a private market auction Facebook shares were sold at $33/share which is a 48% increase in market cap.

I know for me I thought what’s the big hype with Facebook, I only see it as being a way to communicate with others; but with the news of streaming videos comes the endless possibilities this power house can pursue. Having the ability to view a movie for 48 hours for $3 on the most visited website on the internet is going to be very popular. Not only is it convenient but cheap which most consumers value over any other option.

 

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NFLX- Feeling the pressure of competition?

Posted by Justin V. on March 8, 2011 No comments

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Today news was released that Facebook is entering the streaming video business. The company’s first release will be “The Dark Knight” which can be purchased for $3, for 48 hour rental. This news sent NFLX  stock on a downward spiral, closing down 5.96%. Could Facebook really be the reason that NFLX closed down this much with a market that closed 1% higher?

Is this the start of the downward spiral for NFLX?

Since making a high of $247.44 on 2/14/2011, the love for the stock has been deflated, and has since retraced 21%. Announcements of Amazon and now Facebook  entering this business has applied pressure to NFLX.  NFLX who has no real competition, now faces entry from two competitors who may pose a serious threat to revenues. Both Amazon and Facebook have the technological infrastructure and capital to pose a serious threat. Even though neither company has launched their campaign, the stock has taking a serious pounding. Investors more than likely fear one of two things: first, that once these companies launch their service they will lose a significant amount of subscribers, and second, that Amazon and Facebook are just the tip of the iceberg when it comes to competition. It will be only a matter of time before the “big 3″ enter: Apple, Google, and Microsoft. How could they not?  In an industry where these companies are constantly fighting for the top spot, taking on a new venture such as this can only help their bottom line.  The question remains: Will NFLX will be looking in the rear view mirror at one of the companies nipping at their heels for market share or remain the innovators?

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Why NFLX is down this AM.

Posted by Jeff T. - Equities Trader on March 8, 2011 1 comment

HedgeFundLIVE- NFLX is down this morning on news that Facebook will be offering movies through a partnership with Warner Bros. 

Here’s the Article from All Thing’s Digital:

Every digital heavyweight is making a play for your living room. Apple, Netflix, Hulu, Amazon, Google, Microsoft, everyone. With one odd exception: Facebook.

Now that’s over. The social media giant is taking its first step to connect you with movies and TV shows, while collecting a fee in the process. It’s going to let users rent movies directly from the site, using Facebook Credits to pay for the transaction.

First up is “The Dark Knight”, from Time Warner’s Warner Bros.. It will cost 30 credits, or $3, for a 48-hour rental, via an app the studio has built for the site. More movies, along with the ability to purchase the titles outright, are coming.

Warner Bros. describes the rental as a test, but there’s no reason this shouldn’t work. Facebook has 600 million registered users, and courtesy of Zynga and other social games, a big chunk of them are already using the site’s virtual currency. Easy to connect the dots here.

Just as important: While other video sites are trying to figure out how to add social “hooks” into their experience, Facebook doesn’t have that problem. It is the social hook.

The only odd thing about this combination is that it’s taken this long to come about. Facebook is either the 2nd or 6th-biggest video site in the U.S., depending on who’s counting. And that’s without the benefit of any Hollywood hook-up at all: Just the clips you and your pals put up.

So just imagine what could happen if Mark Zuckerberg and the big studios decide they’re really serious about making this thing work.

Support Levels are as follows:

200

197.85

193.35

187.50

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