Why Netflex is a Buy

While scanning stocks on Yahoo Finance I noticed that Netflex (NFLX) has become bearish in regards to community sentiment which is driven by the Yahoo Finance boards. Lately the news for Netflex has been pretty good.

The company has just signed some new deals such as becoming a partner with Level 3 Communications (LVLT) which will add at least another 20,000 movie titles for Netflex to stream. Another deal just completed with studio FilmDistrict, will enable Netflex to stream movies before they are distributed to premium cable channels.

Netflex is also in the process of moving their core business model to more of a streaming movie type of company instead of a mail dvd company. Unlike AOL, Netflex is embracing technology and evolving for future consumer needs.

I also have noticed that some well-known magazines have been touting NFLX as being overvalued. I doubt that for all of the above reasons. I somewhat agree with Netflex not paying dividends and instead, reinvesting profits into expanding their market share but I would like to see a at least a 2-1 stock split.

What would be the harm for even a 4-1 stock split? Netflex doesn’t offer a DRIP plan and a lower stock price would lure smaller investors that may think a $200 or $100 dollar a share price is out of their budget. I would assume a lower share price would also encourage their customers to invest in NFLX.

The astute investor usually buys when the sentiment of a particular stock is low. I would be tempted to but this stock myself if the per share price was brought down by a stock split.