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Is 'House of Cards' a Sell the News Event for Netflix (NFLX)?

January 30, 2013 12:46 PM EST Send to a Friend
There is no denying it, Netflix, Inc. (NASDAQ: NFLX) has been a rocket ship of late. Shares are up 138 percent since activist investor Carl Icahn disclosed his stake in late October, up 118 percent since the Disney deal in December, and up 60 percent since last Thursday's better-than-expected Q4 results and outlook. The move has short sellers feeling the pain, to say the least.

Still, traders are always on the look out for opportunities and one might be presenting itself.

Unique content has been a key investment theme for Netflix as the company tries to differentiate itself from the onslaught of competitors. The company's latest foray into unique content is its big bet on political drama 'House Of Cards,' which has an all-star cast including Oscar winner Kevin Spacey and Robin Wright.

'House Of Cards' debuts on Friday February 1st.

While the launch of a series may not seem like a catalyst for the recent run, it could be a catalyst for some selling. Long investors, sitting on stacks of gains in a stock trading at 139x next year's earnings, may use the event as an opportunity to lock in some of those gains. That being said, any sell-off could be seen as a opportunity for short sellers to cover with a little more dignity. This of course creates support for the stock.

So, while the momentum run may not be over for Netflix, traders are on the lookout for a pause in the recent euphoria. Can 'House of Cards' be it?




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