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NetFlix CFO Who Has Been On Stock Dumping Rampage Is Leaving Company

Tyler Durden's picture




 

Just last week we posted the follwing: "Was this the peak of the world's most overpriced stock Netflix? A new
Form 4 filing indicates that the first defection in realization of a
sinking ship may have occurred. On November 4, Netflix Chief Financial
Officer Barry McCarthy sold 100,000 share equivalents, with 91,181
shares sold between $200.36 and $201.11 and the balance from option
exercise
. The sale has left Barry with just 51,563 shares of NFLX stock.
If the CFO believes the time to take profit is in, what does
it mean for the millions of other hot potato holders?" Today we get the answer: "LOS GATOS, Calif., Dec. 7, 2010 /PRNewswire/ -- Netflix, Inc. today announced the appointment of company finance veteran David Wells as its chief financial officer to succeed outgoing CFO Barry McCarthy, who has expressed a desire to pursue broader executive opportunities outside the company.  The change is effective December 10...."We offer both great gratitude and sincere best wishes to Barry.  Over
the last few years, Barry has balanced his affection for Netflix – and
the excitement all of us have felt by the tremendous growth of the
company – with his personal desire for broader professional
opportunities.  Barry concluded that now is the right time to seek out
those opportunities, and we will be cheering for him." Barry will be far more cheered by the absolutely immaculate timing of his NFLX stock dump at the all time high in the stock price, and his gratitude to the suckers who bought the stock is unmatched by that of even Netflix.

 

 

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Tue, 12/07/2010 - 17:49 | 787105 ZeroPower
ZeroPower's picture

An insider dumps shares as he knows 'whats up'. Hence contributes this price information to the market...following him would have been quite profitable.

Tue, 12/07/2010 - 17:53 | 787125 NoBull1994
NoBull1994's picture

actually, if he knew he was resigning, he was in possession of material non-public information....

Tue, 12/07/2010 - 18:29 | 787212 ZeroPower
ZeroPower's picture

Im not a securities law expert, but i do understand it isn't that simple. You can't seriously expect him to not know he was quitting a few days after the share dump. Not saying he was 100% on it, but it wasn't a new idea that popped into his head after the fact..

Tue, 12/07/2010 - 23:23 | 787905 just.a.guy
just.a.guy's picture

The share dumping was undoubtedly part of a 10b5-1 trading plan that was filed way in advance of the actual sales.  Proper execution of a 10b5-1 is an affirmative defense against insider trading, even if you know you plan to quit the day of the last sale.

Tue, 12/07/2010 - 18:24 | 787200 TruthInSunshine
TruthInSunshine's picture

Also known is attorneys' parlance as a "noisy withdrawal."

That's parlance for some other whore professions, too, I guess.

Tue, 12/07/2010 - 17:51 | 787114 tahoebumsmith
tahoebumsmith's picture

Must be on the Ken Lewis program? And we all know what happened to BOA after the same performance.

Tue, 12/07/2010 - 17:57 | 787132 Bob
Bob's picture

Damn, didn't even give the ole 2 weeks notice.  Apparently.

Tue, 12/07/2010 - 18:00 | 787139 Robslob
Robslob's picture

Dummy...you don't have to abide by any laws when you have a Cxx in front of your name.

 

Laws are for peasants...now buy that f'ing dip and get back to work!

Tue, 12/07/2010 - 18:01 | 787144 Mad Max
Mad Max's picture

Massive dumping by a CFO who then leaves the company usually indicates massive gains ahead, right?

:)

Tue, 12/07/2010 - 18:08 | 787164 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

100% of the time.

Tue, 12/07/2010 - 19:32 | 787378 Arkadaba
Arkadaba's picture

+100%

Tue, 12/07/2010 - 21:09 | 787626 Rahm
Rahm's picture

Exactly.

Im glad you understand the new markets ;)

Tue, 12/07/2010 - 18:11 | 787168 firstdivision
firstdivision's picture

Hmmm seems my NFLX puts should be helped by this news.

Tue, 12/07/2010 - 18:14 | 787180 Cdad
Cdad's picture

Aw man...just when his business model was about to be revealed as cross-eyed and color blind.  I was looking forward to the CNBC interviews where he would try to put stupid back into the bottle.

This market is truly no fun anymore.

Tue, 12/07/2010 - 18:37 | 787241 No Mas
No Mas's picture

Oh so very wrong my good fellow.

Trading NFLX as it ran up and trade it again as it runs down?  How much more fun can you have with a market?

Thanks to all who make this possible; Christmas is going to rock no matter the direction of this beauty of a market!!  Just pop baby, just pop!! No matter the where you may head, just keep poppin' dear Mary; just keep poppin'!!

Happy holidays to all!!

Tue, 12/07/2010 - 19:03 | 787305 Cdad
Cdad's picture

I have not been able to get a borrow on Netflix for over a month.  Perhaps, you sell short without those...I cannot.  But I would love to short it if I could. 

 

Tue, 12/07/2010 - 18:14 | 787182 max2205
max2205's picture

Goddammit buy the fucking dips!

Tue, 12/07/2010 - 18:23 | 787197 TruthInSunshine
TruthInSunshine's picture

He's leaving to spend more quality time with the family.

Tue, 12/07/2010 - 18:32 | 787223 Mad Max
Mad Max's picture

No, I'm 100% confident (yes, 100%) that he was leaving to pursue future endeavors.

Tue, 12/07/2010 - 19:08 | 787317 Id fight Gandhi
Id fight Gandhi's picture

Nobody ever has done that! They always say it.

Tue, 12/07/2010 - 18:34 | 787228 Quantum Nucleonics
Quantum Nucleonics's picture

There is no bigger red flag that something is wrong at a company than the CFO leaving for <insert innocuous pursue other interests, more time with family reason here>... well, I guess having the CFO hauled away in cuffs would be a slightly bigger red flag.

Tue, 12/07/2010 - 18:58 | 787296 jkruffin
jkruffin's picture

well, I guess having the CFO hauled away in cuffs would be a slightly bigger red flag.

LOL,  nah you just get extra CNBC coverage for the next pump job, with Cramer saying nothing is wrong, that it's ridiculous to sell, and just BUY BUY BUY! 

Wed, 12/08/2010 - 01:55 | 788149 bobzibub
bobzibub's picture

Just the combination of the FCC coming out against network neutrality and Comcast threatening to charge extra for Netflix streaming. Soon every company that has a wire into your abode will be charging every other company per bit. It'll be a big complicated expensive mess. PS: We downgraded to streaming only when they last raised rates. The picture has improved substantially using the new PS3 client app.

Tue, 12/07/2010 - 18:35 | 787230 johngaltfla
johngaltfla's picture

I know someone else who did this and it's perfectly legal. SO he's smart let's give him credit for leaving before the bubble explodes.

Tue, 12/07/2010 - 18:59 | 787297 AbandonShip
AbandonShip's picture

Legal but shouldn't be.  Stupid Compensation Boards should make that illegal, some kind of clawback.  Pump, Dump and Run--hilarious

 

Tue, 12/07/2010 - 19:00 | 787300 johngaltfla
johngaltfla's picture

PFFFFTTTT. Piss on you. If he didn't do that, I would never have gotten that flight on his G5. I'm glad he did because he told the board they were f'd in the head for their actions when the .stupidity insanity was underway.

Tue, 12/07/2010 - 23:54 | 787974 A Nanny Moose
A Nanny Moose's picture

The rats always know when it's time to jump ship.

Tue, 12/07/2010 - 18:36 | 787233 Ripped Chunk
Ripped Chunk's picture

Naccio virus. It's going to hurt him.

Tue, 12/07/2010 - 18:36 | 787234 Quantum Nucleonics
Quantum Nucleonics's picture

How many talking heads will be on CNBC tomorrow saying it's a screaming buy at $180, or whatever it gaps down to at tomorrow's open.

Tue, 12/07/2010 - 18:38 | 787245 treemagnet
treemagnet's picture

Just buy the dips

Tue, 12/07/2010 - 21:35 | 787695 Mad Max
Mad Max's picture

Only if you can get enough nachos to go with them.

Tue, 12/07/2010 - 18:53 | 787284 max2205
max2205's picture

Stock options bitcheeeez

Wall st still making multimillionaires. It's all good

Tue, 12/07/2010 - 19:15 | 787334 max2205
max2205's picture

Last thought. Too bad he didn't announce next Thursday just before optionex. That would have been extra fun

Tue, 12/07/2010 - 19:17 | 787345 buzzsaw99
buzzsaw99's picture

insiders get copious shares for free. that in itself makes buying stocks a raw deal.

Wed, 12/08/2010 - 00:01 | 787988 A Nanny Moose
A Nanny Moose's picture

Ha! Great deal for the C level fucks whose options become fully vested in like 5 minutes. The company drones have to wait what 1-2 years? It's been a while since I've dealt with this, but you get the idea of the rigging at work here.

Tue, 12/07/2010 - 19:21 | 787357 TraderMark
TraderMark's picture

This is for his kids college fund. 

Tue, 12/07/2010 - 20:07 | 787460 mynhair
mynhair's picture

Barry:  O crap, they've figured out our business model!

Plan B time.

Tue, 12/07/2010 - 20:37 | 787540 PolishHammer
PolishHammer's picture

This creates an excellent entry point (aka DIP) for those who missed out on owning the most advanced company in the world.

Tue, 12/07/2010 - 23:11 | 787871 jomama
jomama's picture

a) they don't have the movies i like or want to watch

b) their streaming option is like watching a shitty youtube video on a HDTV

c) pirating is easier, and much better quality

Tue, 12/07/2010 - 20:57 | 787598 liberal sodomy
liberal sodomy's picture

Marc Cuban II.

I'm jealous.

Tue, 12/07/2010 - 21:08 | 787625 lbrecken
lbrecken's picture

As i have outlined here before I believe this NFLX mgt is blatantly misleading the public on actual number of subs who are streaming.  They have repeatedly mis characterized the company as a "streaming company who happens to send some DVD by mail" when all the antedotal evidence is that under 10% of their based would actually pay for streaming and is doing so frequent enough to classify them as streamers.  This is all a ploy jsut like the debt issuance was then the buy back to prop stock up.

For your review here are the facts:

In the past I have presented multiple pieces of antidotal evidence that NFLX has been misleading investors on the extent it is a streaming company.  The latest of which is a non-scientific poll by http://www.hackingnetflix.com/ that shows that only 13% of its subs would trade down to the $7.99 streaming only package.   If true this implies that the majority of their subs are not streaming subs and this is not in the words of Hastings a streaming company who mails DVD.  ALSO if the NFLX subs are actually mainly DVD based subs who occasionally stream why is then that NFLX is granted an internet cos. all streaming valuation vs. CSTR at  a 50 P/E vs. under 20?  If am correct the street is granting the company a streaming P/E when it should still receive primarily a legacy DVD P/E. 

Past evidence is as followed for your review…..

 

1)      Sandvine Networks study implies NFLX streaming subs that represent 20% of primetime traffic are actually under 1M.

2)      NFLX hiring actors to fool investors on Canadian launch.

3)      NFLX vague definition of extent of its subs streaming then announcing it will no longer disclose stat.

4)      NFLX representing <1% of AKAM’s revenues.

5)      Announcing a streaming only plan AFTER the fact of convincing investors that it’s a streaming company.

6)      Extension of free trial period to a mth from 2 weeks.

7)      Free sub rise as a percent of new subs in recent qrts and relative to 4Q guidance.

8)      Actual cord cutting subs in total across all legacy cable MSO amount to a few hundred thousand.

 

Tue, 12/07/2010 - 22:59 | 787836 frankoo
frankoo's picture

Is he on or off Cramer's wall of shame?  Inquiring minds want to know.

Tue, 12/07/2010 - 23:09 | 787864 jomama
jomama's picture

and that folks, is why you get a degree in finance.

Tue, 12/07/2010 - 23:12 | 787875 insidious
insidious's picture

Anyone who buys Netflix stock at $200 per share better know what they are doing and have their stop set pretty tight. Rocket rides are more fun going up than coming down.

Wed, 12/08/2010 - 00:34 | 788061 palmereldritch
palmereldritch's picture

Netflee(ce)

Wed, 12/08/2010 - 01:32 | 788135 Miles Kendig
Miles Kendig's picture

Heck, let's see if more CFO's have the stones to resign in the face of recovery at any cost national security imperatives

Wed, 12/08/2010 - 07:52 | 788281 BearOfNH
BearOfNH's picture

It might be interesting to concoct a cap-weighted index of companies whose CFOs have resigned and left the company. Not sure how easily one can acquire such historical data but it could be instructive.

Wed, 12/08/2010 - 09:22 | 788361 mogul rider
mogul rider's picture

We now know why we buy the physical these days - don't we people?

Everything else is a coke-induced nightmare,

A scam or counter trade by the squid

a tax

a QEx

a Bernank

A .........

Wed, 12/08/2010 - 09:23 | 788365 mogul rider
mogul rider's picture

My oh my

 

the shorts are getting one last exit today before 1650

Wed, 12/08/2010 - 16:59 | 789962 waylon153
waylon153's picture

Smart man, that Barry.  Good to see some form of capitalism still works.  Best wishes to him.  He's managed to restore some faith in this crazy system.  Buy low, sell high.  How much simpler could it get?

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