Professor Elam

Friday Sept 16, 2011

Last night in ACCT 3301 an alert TAMUSA student noted Netflix has dropped $100 in a month. What's up with that?

Page B 1 in the WSJ this morning reports that Netflix pricing gets a thumbs down, and indeed another student made that point last evening. The pricing plan is causing the loss of one million customers. The stock price dropped, whoops, 19% in one day. 

My remarks were that NFLX has been one of the over priced hot stocks this past year along with OPEN and Chipolte Mexican Grill and LULU (LULU helps yoga devotees avoid the stigma of low priced yoga togs, a must for sure in this recession….) NFLX still sports a 40 to one price earnings ratio, about twice what the overall market is priced. Is it worth it?

Last evening I took the class through the Wall Street Journal, a how to course of reading it. I mentioned the Classic column, Heard on the Street. Today that column makes the point that NFLX has raised prices but other media companies and cable companies seem determined to raise them even higher. If that is the case, NFLX may just be pulling back in a correction. this is one to watch. Thanks to our alert student for noting this interesting development in streaming video. 

More and more of you are beginning to engage in the real capstone course, following world capital markets. I am delighted to see students using their studies across multiple disciplines to ask informed questions and bring informed observations to class – keep it up!