Professor Elam

Monday Sept 19, 2011

NFLX stock has collapsed-about 50% in two months. I have mentioned it as a high flyer on the markets blog. Remember this, stocks go up because there are more buyers than sellers, it is just that simple. And with the concentration of buying in hedge funds, all buying the same few stocks like NFLX, GOOG, AMZN, LULU at the same time, the results can be spectacular-both ways! The change in pricing structure turned out to be the news event that turned the 'school of fish.'

Now, the CEO is apologizing.  An alert TAMUSA student mentioned NFLX in the ACCT 3301 class Thursday night. I wanted to be sure to follow up with this event. It is important as a CEO to admit your mistakes but the damage, stock price wise is done. 

My take is that a $300 price was an over estimation at the top. But we are in an overall BEAR market, so things like this are going to happen. You can locate lots of speculation as to wether NFLX is about to become the next Blockbuster or whether this will be a buying opportunity. 

Fundamental Analysis involves using accounting and finance tools to analyze the internal results for a company. Technical analysis involves analyzing price movements representing the decisions of millions of people with all their market knowledge. 

So I quickly eye balled the longer term weekly chart. Each bar is one week of trading for NFLX. 

Note the long term uptrend has been broken. Now where did significant buying occur on the way up?

Looks like 50 and then 100 to me. So the bleeding ain't over yet.