Concerned? People are "concerned" about their children; analysts are "concerned" when 30% of the float is shorted, and the stock doesn't come in to the hedge funds who are short the stock. So we get a research fluff piece, with a sell recommendation that is picked up and disseminated by NY Times.
The Postal Service did an audit, and found that sometimes the adhesive flap causes the mail systems to jam, and thus the NetFlix mailer has to be sorted by hand. The Citigroup analyst said that 70% of all Netflix's envelopes did this. (He probably did "channel" checks at the post office.) The Postal service estimates this costs them over $21 million a year; and they would like .17 cent surcharge when the machines jam. (Netflix says they save the Post Office $100 million a year by picking up the returns instead of having them delivered by mail to them.) So the report said if Netflix "has to bear the full brunt of this increase (without other cost offsets), monthly operating income per paying subscriber would fall 67 percent from $1.05 to 35 cents."
And this is the "scary" headlines, with the sell recommendation that is pinged around the street, not the offsetting paragraph that says this: "Given the magnitude of this risk” Netflix is most likely to “work towards resolving this issue by redesigning its mailers." How about a stronger adhesive on the flap?
Which is how Wall Street works. There are always two sides of an issue, but Wall Street shows the cards they want, when they want the stock to move in the direction they favor.
And if you don't do, what they say to do, when the issue, which is not an issue, is made to be an issue, you'll be better off!
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