) stock rose almost as high as 20% Wednesday after renowned
reported his new stake in a 13D filing to the SEC - a total
purchase of 5,541,066 shares or 9.98% reign of the company.
The filing outlines the purpose of the transaction, which
amounted to $168.9 million including commissions and premiums,
with reasons similar to what Icahn has outspokenly claimed in
previous leveraged buyout initiatives.
"[Netflix] shares were undervalued due to [its] dominant market
position and international growth prospects," the filing stated.
Today, Netflix trades at $76 per share, a deflated number
compared to its five-year peak in July 2011, when it traded a
couple of dollars shy of $300 per share. With a market cap of
$3.86 billion, the company has a P/E (ttm) ratio of 36.9, a P/B
ratio of 5.8 and a P/S ratio of 1.2.
to view the company's price valuation.
The filing also stated: "The Reporting Persons [Icahn Capital
Management] believe Netflix may hold significant strategic value
for a variety of significantly larger companies that are engaging
in more direct competition with one another due to the evolution
of the Internet, mobile and traditional industry."
According to its website, Netflix, with its Internet subscription
service for movies and TV programs, has more than 27 million
streaming members in the U.S., Canada, Latin America, the United
Kingdom and Ireland.
How it works is Netflix members pay a monthly price to attain
access to its services via PCs, Macs, internet-connected TVs,
video game consoles, mobile devices and MP3 players.
Additionally, Netflix also enables members to organize movie
rentals online and distributed via mail, with the added perk of
no late fees.
In its 10-Q SEC filing reporting third quarter earnings, its
domestic and international subscriptions experienced increases
within the three months, compared to the numbers last reported in
the second quarter of this year, whereas its domestic mail-in DVD
service experienced the opposite in its total subscriptions at
the end of the period.
And as the details in the SEC filing have suggested, there are
companies, some much larger than Netflix, competing in the
swiftly expanding digital media world.
One example is Hulu, a company that operates under pretty much
the same premise, and is owned by Comcast (
), which is currently selling at $37.60 per share.
Additional companies that are seen as competitors include
) trading at $29.45 per share, Amazon (
) trading at $231.55 per share, Apple (
) trading at $596.99 per share and Google (
) trading at $687.02 per share.
To view how Netflix compares to the mentioned stocks, visit the
GuruFocus Compare Feature
Over the past year, Netflix had experienced a positive trendline
for its earnings per share. As of the quarter ending in June,
Netflix reported $0.11 for is earnings per share.
View more of Netflix's financial data on its
GuruFocus 10-Year Financials
page; click on the options to see its varying trendlines.About
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