Netflix Starting to Mature (NFLX)

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Trading in shares of Netflix Inc. (NASDAQ: NFLX) gave an interesting pre-market alert at Volume Spike this morning.  The DVD rent-by-mail service is feeling pain early this morning after offering some very mixed guidance.

The company sees Q3 revenues of $343 to $348 million and Q4 revenues of$353 to $359 million.  First Call had estimates of $345.8 million forQ3 and $364.8 million in Q4.  On earnings its sees $0.26 to $0.34 EPSin Q3 and $0.30 to $0.38 EPS in Q4.  Its Q3 estimates are $0.31 and Q4estimates are $0.32 EPS.

It also expects Q4 subscribers at 8.95 to 9.25 million by the end ofthe quarter.  Last quarter it had 8.411 million subscribers and itpreviously said it was expecting a subscriber base of 9.1 million to9.7 million for the year-end.

This would have been an easy pick of companies which might face pressure from a slowing consumer who is looking for ways to trim down on steady expenses.  But it may also be a sign that the major rapid growth model it has enjoyed may be starting to mature as well. 

We have still seen thin volume with only 5,200 shares pre-market withits last trade down almost 10% at $26.15.  Its 52-week trading range is$20.35 to $40.90.

Pre-market trading volume is more indicative of confusion rather thanconviction for a stock that trades almost 1.5 million shares per day.Where this one ultimately trades is anyone’s guess based upon the lackof investor trading this morning.

Jon C. Ogg
October 6, 2008