Netflix, Inc. (NASDAQ:NFLX) is one of the most talked-about stocks right now because of its incredible rally over the last nine months. In 2011, it was worth just under $300 per share, but the unpopular decision to split DVD and streaming subscriptions sent the company’s stock into a nosedive.

Netflix

In September 2012 it was trading closer to $54 per share, but now Netflix, Inc. (NASDAQ:NFLX) shares are trading at over $200 per share. Needless to say, it’s easy to see why investor views on the company vary so widely. CNN Money contributor Kevin Kelleher compares the bull case to the bear case for Netflix and has some really good points.

The Bull Case For Netflix

Perhaps the main focal point of the bear case for Netflix, Inc. (NASDAQ:NFLX) is content costs. This has been a concern for many years, but Kelleher gives this part of the argument to the bulls, at least for now. The company has been rolling out a lot of original content over the last year or so, putting it directly in competition with the likes of HBO and Showtime and making $8 per month seem like a good deal. Kelleher believes the bulls win this argument because shows like House of Cards likely helped add about 2 million subscribers to Netflix in the last quarter.

In terms of competition concerns, Kelleher also believes the bulls have the advantage because in his view, Netflix’s tablet app is the best, and it has “the most compelling” online video library, although it may be shrinking. And then of course there’s momentum. Netflix, Inc. (NASDAQ:NFLX) has been on a tremendous tear in recent months, and short interest has shrunk over time. It’s been around 9 or 10 million shares, according to Kelleher, compared to last fall when short interest was 17 million shares.

The Bear Case For Netflix

In terms of financial performance, he gives the advantage to bears because of Netflix, Inc. (NASDAQ:NFLX)’s expansion plans. So far some of that spending is making a difference in the company’s gross margins, which rose to 29 percent from 26.8 percent in the previous quarter.

Of course valuation is also a big concern for bears because the current P/E ratio of Netflix is a whopping 540. It doesn’t take much to see why the P/E ratio goes to the bears.

Netflix Making Strides For Improvement

Netflix, Inc. (NASDAQ:NFLX) will be added back to the NASDAQ-100 Index (NASDAQ:NDX) starting tomorrow, so that’s another bit of good news for the company as it looks to regain more of its credibility as an investment.

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