Is a club of 62 million people paying a small amount of dues vs. what they might pay for cable really only worth $33 billion?
What kind of foolishness is that?
I know, I know, the stock's had a big move. But don't give me any of that "hindsight's 20/20" because my thinking on this one has always been the same. You are dealing with a worldwide cable company without cable that gives you programs you want without the stations you hate but are there for political reasons that has original programming that exceeds the value of those from traditional networks and yet is valued at less than most of these competitors, and they are competitors.
As long as it hangs "down here" at these valuations, it can very easily be acquired or grow into a bigger market cap.
This company has always been confused as a junior also-ran oddity instead of a super cable powerhouse with original programming that is a fraction of the cost of traditional cable, which is often regarded as the most expensive tax on your life beyond your mortgage payment and your actual taxes. Most people only want live games anyway. Many hope that Google (GOOGL) buys the live games of all sports on demand, a-la-carte style, and then you get the DirecTV (DTV) package for NFL.
Anyway, it's a pretty simple thing to understand: All of cable and entertainment is overvalued except Netflix (NFLX), so it has to gallop to get where it has to go the way PepsiCo (PEP), Coca-Cola (KO), Merck (MRK) and Pfizer (PFE) had to move in the 1980s and '90s when they went international. These are all proper analogues and they explain why the stock can move up.
Oh, and your cable bill's been going up for years.
Just wait until Netflix does a fraction of that increase.
Random musings: Lots people praising my short-buster piece last night on Mad Money, but it wasn't. It was just an explainer...Oh and yes, I am getting married this weekend, to Lisa Detwiler, my longtime soulmate. Thanks for the well-wishes!
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