One of the funny things about the stock market is how fickle it can be and how quickly a knee jerk reaction can make a stock take a violent dive.
Netflix is a perfect example. They were high flying in the $300 zone and made one public change that resulted in 800,000 subscribers canceling their Netflix accounts. The markets reacted and the stock nose dived. No body looked at the long term outlook for the technology, the company or the deals they had in place.
The smart buyers were standing in Best Buy, Costco or Wal Mart, buying new TV’s and seeing the Netflix red button staring them in the face from its comfortable position on the remote. We upgraded two TV’s this year, both have a Netflix button, only one has a Yahoo! button. I don’t see Amazon or Redbox anywhere on the remote.
Here we are not even two quarters later and the stock chart looks like the half pipe I should be out skiing right now. As the stock passes through $125, there isn’t anything that has changed from the fundamentals when the company was at $300.
Watching the charts the last couple of days, there were some major stock dumps. Oddly enough there were plenty of buyers who think $125 isn’t the top and the stock price barely flinched.
Normally I don’t condone this type of trading since Netflix is still not paying a dividend or making oodles and oodles of money, but is it gambling when all of the black remotes on the roulette wheel have a little red button in them? It just looks to me like the bet should be red for a while.