Some of the craziest Wall Street action anyone can remember has taken place in
all of four little letters: N-F-L-X This week, Netflix (NASDAQ: NFLX ) has taken
the ol ker-plunge careening over the edge, going from the land of triple-digits
to double-digits. In fact, just 3 1/2 months ago, NFLX fetched $300 per share.
And as I pen this note to you, it goes for just around $80. Wow. To be sure,
theres a unique way to put a bunch of fungolas in your pocket because of this
truly unique situation thats been served up here. And thats what this edition of
the "Weekly Windfall Corner" is all about. The New Era for NFLX Traders My
strategy for NFLX takes advantage of two new realities facing the company: 1)
There will be many, many, more months of volatile, temper-filled action in the
stock price, and 2) Were witnessing a one-sided overreaction on a scale that
hasnt been seen in some time. Now, theres no denying reality, which is that the
stock dropped $40+ in one day, and is trading in the $70s right now. Its also
happening at six times the normal daily trading volume. This kind of action is
what it is and it doesnt lie! Not only this, but NFLX already has been
dropping, sliding, losing and bleeding for several months now. Investors have
been factoring in the new subscription changes, the price hikes, etc for several
months already! Before the earnings announcement, it was no secret Netflix was
losing subscribers. The company even said so. They had estimated this number to
be around 500,000. But this week when they reported the real number to be
800,000 lost subscribers, investors freaked again sending the shares down 35%
in one day! But wait. Is that you asking how many total subscribers Netflix has?
It is? Well, they have upward of 23 million. In other words, they still have 23
million paying subscribers! NFLX's Bigger Picture Hasn't Changed All That
Much! So did they bungle their strategy a few months ago? Yes. Was their
communication not the best? Yes. Is their CEO not the most-polished on all
corners? Yes, yes, yes. Thats all true. But to lose 75% of the companys market
cap in all of three months after losing about 3% of the subscriber base? What we
might be witnessing here is some of the most one-sided action in years, and
heres how I see things The whiners and complainers are dropping off 800,000 of
them so far. Theyre furious, upset and voting with their feet teaching Netflix
a lesson. But then theres the vacuum theory, which states that when you remove
something (like old clothes from your closet that dont fit), something newer,
cooler and more pleasant will rush in to replace the void. Right now, extremely
angry and bitter folks are leaving. And when alls said and done, its probably
going to be easier on the company, thanks to the vacuum theory! And if they dont
replace them, I dont think Netflix cares . Im just talking about reality here.
Theyd never say it, but maybe Netflix has turned a corner. After all, theyve
been running this same business model forever … theyve had mega success …
but now they want to modify it. An Inflection Point for a Solid Business Im sure
they see the landscape with a much broader lens than someone sitting in Topeka,
Kan., ticked off about their new, higher Netflix bill. After all, the company is
extending streaming services overseas (with a launch in the U.K. and Ireland set
for early 2012). They are busy signing new, exclusive content deals. And they
also know that MOST CUSTOMERS WILL REMAIN THAT WAY when alls said and done!
Again, 23 million paying subscribers are still 23 million paying subscribers.
And those people re-upping their membership every month means there's a
money-making options trade for YOU in there. Get the details on the next page…
Learn Preston James'
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