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Update: Netflix up on Buyout Speculation

Written By Brian Hicks

Posted December 13, 2011

It doesn’t get any easier than this.

Word on the Street was that Netflix (NFLX) could get bought out… again.

So we bought NFLX put options in Options Trading Coach at $4.40.

A day later, we exited half at $6.  

That’s amazingly better than what a “short” profit would’ve returned.

As we’ve seen time and time again, it just never works out. Netflix has a bad CEO, a management team that’s run this company into the ground, guaranteed losses through 2012, and a disloyal customer base that’s being asked to pay more money for rentals.

According to The Wall Street Journal, Netflix owes more than $3.5 billion over the next few years. That’s just about equal to the company’s $4 market cap.

Why would any one buy them out knowing that?

But the rumor-mill never works out. What’s interesting is that this rumor is resurfacing a week after Verizon said it was working on a video streaming service to compete with Netflix. Word on the Street last week was that Verizon was teaming up with Coinstar.

Plus, every time the stock challenges its 22-day moving average, it backs off. 

You see, what I liked most about the Netflix rumor was that I knew it was bogus. 

Porter Bibb, a managing partner at Mediatech Capital, was the source of the rumor.  He even told Bloomberg TV that Verizon was “very serious” about buying out Netflix.

And Bloomberg even reported it…  Of all places, Bloomberg reported what this “serious” partner had to say.

“I am hearting rumblings from inside Verizon that they are very serious about either Netflix or something similar,” he says.

But Bibb, according to the press, has a history of making bad claims.  He did it in November 2010 and January 2011.  And neither turned out to be true.

How this guy isn’t behind bars for stock manipulation is beyond me…