I dissed NFLX’s manic leap on Tuesday as misguided, but with yesterday’s nasty relapse the rally is starting to look more like a garden-variety short squeeze. My point was that the stock should have gone lower rather than higher on news that the company is raising its price for its streaming service. Some would argue that another $1 or $2 won’t be noticed, but this overlooks two important facts: 1) Netflix has some tough competitors, including AMZN; and 2) the selections in its streaming catalogue stink, at least for people who like movies. The stock is still too much the darling of Wall Street’s portfolio geniuses to write off, but if the retracement continues down to the recent low near 312, it could wipe the stupid smile from their faces.
