Time to Turn Bearish on Netflix?

Netflix Chart - 2010 (Click to Enlarge)

Technical Analysis

Looking at our chart above, you can see that moderate support lies down around 165 with a 100 day simple moving average at 160. Trading volume has also slowly been decreasing whether this is due to it being end of the year or just lack of buyers is hard to say. If short,   have an initial profit target at 165, with a stop loss at 212.

Valuation By The Numbers

Price to Earning Ratio: 69.27x

52 Week Range: $48.52 – $209.24

Current Price: $180.27

Some other numbers is that the Price to Earnings ratio still comes in at 48 times  when considering the earnings forecast for the next 12 months.  Netflix also currently trades at nearly five times their annual sales. These are extremely high multiples. Also, the market the Netflix is operating in is ever becoming more competitive which will eventually lead to depressed profit margins.

Here is a more in depth article: Why We Are Short Netflix