Netflix Implodes After Reporting Horrific Guidance; Notes It Repuchased Stock At $218 Avg Cost Basis

Tyler Durden's picture

One hopes that the European surprise on Wednesday will be more successful than this. In the meantime, the XIRR on Jim Cramer's recommendation to buy NFLX on Sept 26 at $135 through the current AH price of $87 is -99.6%.

Earnings summary shows EPS forecast peaking at $0.70 which the street had at $1.10. Explains the epic collapse in the stock after hours.

Some highlights from the letter:

  • We expect streaming net addition will be negative in October due to the cancellation wave referred to above
  • We used $39.6 million in Q3 to repurchase 182,000 shares at an average cost basis of $218.
  • After the repurchases we finished the quarter with $366 million in cash and equivalents
  • We expect to report a global consolidated net loss in Q1 2012 as well as to consumer cash as we launch the UK

And here is why we repeat our warning from last year, that Netflix' business model demands a follow on offering:

  • We expect our FCF to continue to lag net income for the next few
    quarters as our spending on content continues to increase both
    domestically and internationally
  • By pausing on further international expansion and halting buybacks, our current cash on hand is adequate to support the growth of the business. As we have done in the past, we will continue to evaluate the appropriate cash level for the business

Cramer buying at $135 on September 26, 2011

The IRR for anyone who listened to Cramer a month ago: -99.6%

In other news, sub $100  make that $87

Full earnings "investor letter"