The One That is Getting Away – Netflix (NFLX)

Not the best way to start off this series of “Successful Unknown Companies”, but I could not resist doing an article on Netflix (NFLX). Probably about a third of my earnings this year has come from NFLX.

This company basically took out Blockbuster.  Twenty five years of glory and now its been replaced by Netflix (thirteen years and counting). With more than twelve million subscribers, it is the world’s largest subscription service streaming movies and TV episodes. For one reason or another the stock has been going bonkers lately. I can think of a couple reasons why this might be the case. About a week ago, it raised its subscription fees a dollar per month. Furthermore it announced that it would be providing a streaming-only subscription.

Call me crazy, but that sounds like cannibalization. Online streaming will take away from DVD subscription packages. However, I believe this is the right thing to do as the world is definitely moving away from DVDs and more focus has been placed on the Web. Amazon and Hulu are a couple players already in the market. Though I’d argue Amazon’s streaming content is limited. Firms that provide streaming web content have entered into agreements with studios to provide content weeks after the release of the DVD. Evidently, studios DVD sales are declining and this is namely due to content being streamed online. If we bring this full circle, you can understand why it makes sense that the studios are limiting and delaying the release of content to streaming media providers.

In late November, NFLX gapped up approximately $10. Since then it has continued to climb hitting $200. In the last three months and six months its been up approximately $58% and 80% respectively. Since inception it has been up over 2000%. How insane is that? How is it possible that a service that simply provides streaming media and DVDs suddenly have a market value past $10.4 billion?

I’d have to say that their competitive advantage is branding. It is highly recognized across the nation. A recent survey conducted by an independent party determined that over 90% of Netflix subscribers would recommend Netflix to a friend.  Blockbuster had tried to retain its market share by providing DVDs by mail, but Netflix’s branding was far superior and eventually over took Blockbuster. This is despite the fact that Blockbuster also had brick and mortar operations across the nation.

How do you get to the point where your branding is far more superior compared to your competitors? You build that brand/reputation through providing convenience, fast delivery, and variety of selections. Since entering the Web to compete against YouTube, Amazon, and other streaming content providers, Netflix has increased its library by an estimated twenty six folds!

Sadly, like all things, I believe at some point this will come to an end. The stock will drop and the hype will drown with it. Until then it is best to ride the wave and catch as much of it as possible. Beware as this seemingly one trick pony could flip out at any moment. Still it looks like a fantastic party right now.

The writer does not own NFLX. The information provided on this site is not advice to buy, sell, hold, trade, or invest in any securities. I am not a financial professional. Do your own research before acting on any information provided on this site.

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Successful Companies You’ve Never Heard Of

In light of the new Green Lantern movie coming out next summer, I’ve decided to start off my Monday with Blake Lively. Until I read Blake Lively‘s wikipedia, I had no idea that she was so young. For one reason or another, I feel like she’s been in the industry for a while now. But, the point is she is pretty.

Anyhow, I digress, it is Sunday night and as always I get my best ideas the night before I have work the next day. I’m looking to kick-off a series of analyses of companies that have been performing well the last three to six months in the stock market. My analyses will primarily be focused on fundamental analysis, as we all know in the long run the stock price is more or less driven by fundamentals. It will include and is not limited to what makes each individual company so profitable, the competition, barriers to entry, products/services the company provides, and if there is potential for further growth. I’ll primarily be focusing on companies that are not typically on people’s radars. 

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FDIC Insurance Coverage Essentials

The Federal Deposit Insurance Corporation protects depositors of insured banks. Should a bank fail, the U.S. government cover your amount in the bank.

What is covered? 

Essentially, cash and cash equivalents. Stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities are not insured.

What amount is covered? 

$250,000 per depositor, per insured bank. That means you can have multiple accounts with $250,000 be insured as long as they are at different banks.

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When do I have to purchase a stock to get its dividend payout?

When do I have to purchase a stock to get its dividend payout?

Simple answer: Three days before the “Date of Record” or before the “Ex-Date”

1) What is the “Date of Record” and what is the “Ex-Date”?

The date of record is the date on which the company sees who is a shareholder. The “Ex-Date” is three days before the “Date of Record”.

2) Why three days?

The settlement of stocks is three days. That means from the day you initiate the transaction it takes three days from the date for the change to be reflected in the company’s books.

3) Where can I find out what the “Date of Record” or “Ex-Date” is? 

You will find your answer at Google Finance searching by Ticker Symbol or Company.  

4) When will I be paid?  

Typically companies will announce a “declaration” of dividend payment. Similarly the “payable” date will be announced. 

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