Netflix has gone thru many transformation since 2008. It started off flying like a crop duster, bumping up and down over the farmland until it transformed itself into a P-51 Mustang in 2009 heading toward the sky. From 2010, Netflix shed its old skin and took off like a F-15 fighter jet plane heading toward the stratosphere. By mid 2011, Neflix was cruising on outer space as a space shuttle intending on orbiting around the earth.
Then something happened!
Netflix CEO Reed Hastings decided to write his infamous letter in mid-2011.
The fall was turbulent. It fell thru the atmosphere like a hot knife cutting thru melting butter. If you bought at or near the top, every hesitation would cause you pain and depleted your beloved coins. The violent free-fall hit the support so hard in late 2011 that it bounced majestically back to the 130ish in early 2012. But the big bounce was simply due to the force of the deadly fall more than anything else. Eventually, gravity took it toll and Netflix resumed its nosedive once again. It bounced again on the same support but only on a tepid level.
As of now, Netflix transformed itself into a submarine and dive into deep water.
But like all self-contained metal container that filled with living organism inside, it needs plenty of air supply to keep the occupants alive. Thus, the question is, “does Netflix has enough air supply to keep shareholders alive while it is diving into deep water?”
As you can see the Netflix weekly chart below. NFLX broke support and dive into the next support around 52ish. If it continues to dive toward the next support at $41ish, I’m afraid air supply will run out and a dead spiral may happen.
I’m very curious about how Netflix is going to find the air supply here and I don’t think it is that easy when you are under water. So, I’m testing my theory by buying NFLX put option even at this level.
The above parody is not to be taking seriously. Netflix may well transform itself into a Transformer and fly off the water into the outer space in one moon shot. That is why I’m buying put option only so my loss will be limited.
Good Hunting!
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