Is Netflix an Attractive Investment?

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With shares of Netflix (NASDAQ:NFLX) trading around $429, is NFLX an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Netflix is an Internet subscription service that streams television shows and movies. The company’s subscribers can watch unlimited television shows and movies streamed over the Internet to their televisions, computers, and mobile devices. In the United States, subscribers can also receive DVDs delivered to their homes. Netflix has revolutionized the television and movie industry with its services.

Netflix has some big plans for 2014. In addition to creating nine new original series during the year and releasing new seasons of beloved originals like House of Cards and Orange is the New Black, the company is planning to spend $3 billion on buying other content during the year, according to the company’s yearly filing with the U.S. Securities and Exchange Commission. Over the next three years, the company is setting aside $6.2 billion to acquire content. To help raise the money, Netflix announced on Tuesday that it plans to offer $400 million in convertible debt that will be paid back by 2024. Netflix recognizes that curating a wide variety of licensed programming is equally as important as its efforts in creating original series.

“People’s tastes are very broad, even in a single market. The Internet allows us to offer a wide selection, and to have our user-interface quickly learn and make recommendations based upon each individual’s tastes. Those members who love action blockbusters, Korean soaps, anime, sci-fi, Sundance films, zombie shows, or kids’ cartoons will find that Netflix fills their homepage with relevant and interesting titles,” the company said.

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