Netflix - A good short?

Anyone who follows stocks knows the story of Netflix.  Distributes videos by mail and by streaming.

Stock was in the $50 range a few years ago, and suddenly caught fire, moving over $300.  Then a string of questionable decisions by management cut 75% from the stock, hitting around $62 for a recent low. 

The stock has rebounded slightly and is up to $79 as of today.  It jumped $8 yesterday on takeover rumors. 

In my opinion, the rumors are likely unfounded.  The stock still has a $4 billion market cap, and is still in a space that is can be invaded by others, particularly giants like Amazon or Apple.  It is definitely first in the market, but could be supplanted, in the way book and movie sellers have been in the malls.

It also has competition from Redbox and Blockbuster. 

I think the streaming business is worthwhile, but not necessarily at these prices.  Be very careful, as there is a big short position, and squeezes are likely from time to time.

Disclosure:  No position.

Gamestop

This retailer deals primarily in games, and is found at malls and strip shopping centers.

Why should you short this? 

• Following the Peter Lynch philosophy, I checked a few stores out around the holiday.  Two days before Christmas, one of the strip stores was empty.  Really empty. Two days after Christmas, when the mall was packed, there were a few people in this store, checking out the titles.  Very little buying going on.  When Christmas sales are reported, this store may be very light.
• There are a lot of other options for buying games.  Amazon, WalMart, Target.  Yes, it's nice to be able to choose from a lot of options, but that's available on-line. 
• The stock isn't terribly overpriced, from a valuation perspective.  But, it's not really cheap either. 
• No dividend to worry about.
• It's on the list of most shorted stocks, so there are a lot of people who think this way.  Just watch out for the regular short squeeze.

Good hunting.