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I owned Netflix back at $18 in my portfolio. I felt strongly about the company and was an early adopter myself.
For some reason (which I can't recall) I sold it around $22 even though it was in my long term portfolio. Every few months since then I've looked at it, wanting to get back in, but was suffering from that old problem of not wanting to get in on a high note. LOL, now it is above 170.
Although I'm no William O' Neil, I'm my humble opinion, NFLX isn't even close to saturating its long-term prospects.
However, given that you didn't enter the stock while it was basing and your considering a 5yr long term hold horizon we should consider the macro perspective at this time. The Fed is holding interest rates at zero percent in order to recapitalize the banks. When interest rates finally rise, this could be a game changer that will influence all floating ships.
Respected investor Jeremy Grantham had some interesting thoughts to share recently.
That said, I think you can also benefit from a long term growth prospect by trading it vs. long-term hold approach.
With fractional position sizing, 'too high' insecurities that don't belong with momentum investing will be less likely to affect you. (This way you can at least capture a small piece of the pie using your expert prowess in the area)
It looks like it's priced to perfection. Should it miss the lofty quarterly expectations, the market will not be forgiving. If you really like the business, that may be a good time to buy.
So is NFLX a buy now? Was the recent sell off over done? Was the recent customer mass exodus now a thing of the past, and we can return to normal growth? After all, streaming is the way of the future... way of the future... way of the future... (The Aviator), so, buy?
The only reason to buy is that the shorts have to cover. But when (where) does that happen? If the stock starts to go into rally mode as the shorts cover, the rubes who are holding the bag on the stock at some point will capitulate and keep knocking the stock down. Case in point my step father who buys the momentum game and earnings season played with NFLX. I always said he "trades off the seat of his pants." He bought 200 shares at $300 trying to play the earnings game, why not he made thousands doing it before. Well, this time it didn't work. He did dump 100 at 260 or better, but he is holding the bag on the other 100. I told him to get out. So when does he capitulate? I do not know. Case in point, he did over 100 trades this year and 1 trade destroys him.
Wasn't it the "wave" of the future? NFLX has plenty of growing competition. Blockbuster is trying to get some revenge doing the same thing. This horrendous blunder may have cost NFLX market share permanently.
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