This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Stream Yourself Some Cash, Invest in Netflix

Plus with competition on its heels, Netflix has had to spend to maintain its lead. Besides, nobody seems to complain that Amazon posted a loss of $274 million in the same quarter. The good news, though, is that Netflix continues to grow subscribers at an impressive rate, adding more than 2 million domestic streaming subscribers plus 1.81 million international ones.

The company is growing subscribers while also improving margins -- across each reporting segment. This means that profitability will continue to improve despite the concerns about content costs. In that regard, Netflix may not have much to worry about for long -- not if the company continues to produce solid hits such as House of Cards.

As I was watching, I had forgotten that I was on Netflix and not HBO or Showtime. In the long term, if Netflix is able to produce such original hits, this will benefit investors and lessen Netflix's dependency on outside content, many of which takes a meaningful chuck of its profits.

In other words, House of Cards just might have been the foundation for a mansion. And this has not gone unnoticed from rivals. For instance, according to CBSnews.com, Apple (AAPL), which has its own streaming ambitions, is reportedly in talks with HBO to bring HBOGo to Apple TV. But will this be enough?

As I've written recently, the biggest game-changer for Apple would be to acquire Netflix -- especially now since Netflix has proven capable of delivering original material. For that matter, Netflix's library is already much bigger than what HBO can offer Apple. And it would only cost Apple 8% of its $137 billion in cash.

What's more, that Netflix just recently signed a content sharing deal with Disney (DIS) makes this a deal that Apple can't pass up -- not if it really cares about beating Google (GOOG) in tech and in television. Plus, the lure of Disney offers Apple extra leverage to grow its iTunes business as it will allow subscribers to also stream movies from Disney subsidiaries such as Pixar and Marvel.

In the meantime, investors have to be impressed with this new Netflix and this incredible growth. Though Netflix has been criticized for its "grow at all cost mentality", the company has instead believed "if we build it, they will come." Although many didn't believe in Netflix's infrastructure builds, but this has worked perfectly. Today it's a House of Cards. In time, investors might be in mansions.

At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
NFLX $658.31 0.00%
AAPL $126.44 0.00%
FB $87.28 0.00%
GOOG $523.40 0.00%
TSLA $280.02 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs