Netflix, Inc. (NFLX) Shorts Are Tough as Nails

Netflix, Inc. (NASDAQ:NFLX) short-sellers have a tremendously high pain threshold. I mean, they can sleep on nail beds and crushed glass. Drink molten iron for breakfast. Chuck Norris might be shorting the stock, judging by the toughness requirements.

You know the story. By the middle of January, Netflix had 22% of its float sold short, and a crucial earnings report on deck. The report was everything shareholders dreamed of and short-sellers feared. Share prices jumped 42% the next day and another 17% the day after that.

Netflix, Inc. (NASDAQ:NFLX)

You’d think this action would shake out a lot of short-sellers. After all, the potential downside to being short is pretty much unlimited — especially with a highly volatile stock like Netflix. And it’s not always up to the shorters when to cover their bearish positions. Their hands may be forced by margin calls.

Well, the next report on short-sale statistics is out, and Netflix is still followed by a large herd of bears. As of Jan. 31, the negative bets had shrunk by just 4%. There’s still plenty of room for a drastic short squeeze.

Now, the exchanges don’t provide a whole lot of detail other than shorted share counts. It’s entirely possible that Netflix experienced a short squeeze in January, but that an inflow of new thumbs-down bets replaced many of the covered positions.

History might add some steel to your stomach lining. Looking back at charts from 2012, Netflix delivered another big January jump but followed up with a severe drop on the April report. That time, investors didn’t like the prospect of increased seasonality doing damage to the upcoming slow summer months.

That could happen again, proving the bears right for a while. As I said, this stock swings like Austin Powers. Or, the company could reap the rewards of its House of Cards investment while international markets mature. In that case, we’ll test the Norris-like resolve of short-sellers again.

The article Netflix Shorts Are Tough as Nails originally appeared on Fool.com and is written by Anders Bylund.

Fool contributor Anders Bylund owns shares of Netflix, but he holds no other position in any company mentioned. Chuck Norris doesn’t buy or sell stocks; he either kills them or lets them live. Check out Anders’ bio and holdings or follow him on Twitter and Google+.The Motley Fool owns shares of Netflix. Motley Fool newsletter services have recommended buying shares of Netflix. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!