This morning when I saw Netflix down 25 points, all I could think of was “Could Google buy Netflix?” At the end of the day, the stock was down another 20 points and now has a market cap of under $9 billion now for the first time in quite some time. This makes the name jump on my radar. The company still has a very strong business model with its streaming movies however, its management team just made some bonehead decisions recently with raising prices so much. I have a feeling they will bounce back and end up retaining some customers by dropping the higher prices a bit. If this company drops to the $150′s or lower I think from a valuation standpoint it will just be extremely inexpensive. Now also with this drop in price, I bet some predators also are watching the stock price moves. One predator in particular is Google who has been on a buying spree this year making some very strategic purchases in Motorola and Zagat to name a few. Now with Larry Page back at the helm, this company is shifting back to spending money for growth which will pay very good returns to its investors over the next couple years at minimum. Google and Apple both have had their eye on Netflix in the past, and I think now with the company being on red tag sale, I think someone is much more likely to bounce. Either name could probably scoop Netflix up for $15-18 billion which they both have in cash. Personally I think Apple has less of a chance to make a high profile acquisition with Steve Jobs stepping down and the new management team still working on many new product releases. Google on the other hand, is in hunting mode, working on executing what I think is going to be a very lucrative 5 year business plan. So could Google buy Netflix? Most definitely, especially as they want to move into the TV market as well, this would drastically help them with penetrating the saturated market.
Could Google Buy Netflix or Pandora
Another name that Google could scoop up right now for very cheap that would work well with Google’s new path they are building is Pandora. Pandora as well has been brought down to realistic valuations and only has a $1.6 billion market cap. This means this name would only cost them another 3-3.5 billion. So if the new aggressive Larry Page wants to keep his foot on the gas pedal, Google could buy Netflix or Pandora or even both with the company’s cash in the bank.
Now will this happen? I do not know, but I could see it happening from the strategy that Larry Page is executing. Google is taking the lead from Microsoft as the biggest competitor to Apple. These acquisitions would make them that much of a bigger competitor on many levels. Because of Larry Page’s aggresive nature, I would not be surprised if the answer was “yes” to the question “Could Google buy Netflix or Pandora?”
Vinny's Stock Watch
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