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Why We're Shorting Netflix

Not much going well for NetFlix except sales growth, which can keep a company afloat for a very long time.

We are shorting NetFlix in bits and pieces as it rises because we don't believe that the cash flow can support the valuation of the business. We're also very scared of the off-balance sheet debt, as well as the debt in general relative to EBITDA.

Netflix management know that they have to create new content as fast as possible because the writing is on the wall. Eventually the networks and content creators will create their own apps and charge you $2-$8 a month to purchase their apps, just like Disney is doing, just like HBO has. to view their content. The future is a buffet of channel choices, where you buy a smart tv, pay for internet, and then pay by app for which channels you want to buy. Want to watch ESPN, pay $2 a month, want VH1, that's another $3 a month. And people will design their own on-demand app tv provider.

Netflix needs to get you addicted to their content before all other content has left back to it's original creators.

That's not a big moat of a business advantage, plus their funding all of this with borrowed money, and stock sales.

The question is when does the stock drop, and can you survive the wait.....

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