The results announced Wednesday served as a resounding endorsement of Netflix CEO Reed Hastings, who has been spending heavily to license more compelling movies and TV shows in hopes of warding off intensifying competitive threats.
Companies such as Amazon.com (AMZN) and Coinstar's (CSTR) Redbox have expanded into streaming video to Internet-connected devices to compete with Netflix.In respect to Hastings' strategy, it's been met with understandable skepticism and yet it has done quite well. But did it really pay off that much during the final three months of last year? This is starting to smell like deja vu all over again! Remember the overpriced high-flyers from the recent past like First Solar ( FSLR) and Chipotle Mexican Grill ( CMG)? We know what happened after they went ballistic. When I warned about them being overpriced, many commented that I didn't understand. Oh, but I do understand why companies become overpriced and how lucrative shorting operations can set the stage for a massive price run-up followed by a big fall.