Netflix shares worth $140 or $90?

Netflix stock hit an all time high of $133.8 in trading today. Netflix stock has been on a tear since late 2008 from a low of $18 or so.

Netflix recently announced a content agreement with Epix which will allow Netflix to offer streaming movies to its subscibers. Netflix will pay $1 billion over 5 years for the content licensing.

“EPIX™ and Netflix, Inc. [Nasdaq: NFLX] today announced an agreement through which Netflix members can instantly watch an array of new releases and library titles from EPIX streamed over the Internet from Netflix. Movies from the multi-year deal will begin streaming from Netflix on September 1 and include movies from Paramount, Lionsgate and MGM.

EPIX has subscription pay TV rights to new releases and movies from the libraries of its partners and will make these movies available to Netflix 90 days after their premium pay TV and subscription on demand debuts. Historically, the rights to distribute these films are pre-sold to pay TV for as long as nine years after their theatrical release.

For Netflix, the agreement is a significant step in building the company’s streaming offer, adding many popular movie titles from some of the world’s leading studios. It adds meaningfully to a growing library of movies and TV shows that can be watched instantly on TVs via a range of leading consumer electronic devices capable of streaming from Netflix and on computers.”

Two Sell Side research companies differ in their opinion on Netflix. Continue reading the rest of the article…

Disclaimer: I had a short position in NFLX at the time of writing. I have since then closed the position.

About Adib Motiwala

Portfolio Manager at Motiwala Capital LLC
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