Thanks to the cost of funding original programming and international expansion, not to mention domestic marketing, cash on hand trends down while free cash flow plummets. Netflix continues to spend more than it takes in. The proportion of cash payments relative to P&L expense continues to rise. Hastings and CFO David Wells admit this much in the same shareholder letter they claim they're raising cash because of attractive rates. In the next breath, however, they claim FCF will turn around, as if Netflix will ever be able to stop the bleeding of cash out the door to pay for originals and third-party content.
Just as it did in 2011, Netflix continues to fire off red flags quarter after quarter. And a vast majority of Wall Street analysts refuse to use their MBAs for anything more than tickets to a six- or seven-figure gigs in Downtown Manhattan. Again, they're irresponsibly ignoring the writing on the wall and falling for Hastings' lines like giddy college coeds interfacing with the football team after the homecoming game. Their clients ought to hold them in contempt. That aside, at least be honest enough to say, Listen, we're recommending the stock because it will go up on nothing but pumping and blind momentum, but, we really can't put our faith beyond the company. Because that's the reality of the situation: Netflix is as close to imploding today as it was in the summer of 2011 when the stock barreled past $300. Follow @rocco_thestreet -- Written by Rocco Pendola in Santa Monica, Calif.