Netflix Stock's High Flying Makes Some Folks Queasy

Netflix Chief Executive Officer Reed Hastings warned in July that it takes “a strong stomach” to invest in the world’s largest video subscription company. He wasn’t kidding. After tripling in value in the year’s first nine months as the best-performing member of the Standard & Poor’s 500-stock index, Netflix swung wildly in October, making it the most volatile stock on the Nasdaq-100 index that month. Hastings himself said market “euphoria” was getting out of hand.

For Netflix, 2013 has been a year of superlatives. Its daring, expensive push into original programming has paid off, with its star-studded show, House of Cards, winning the Internet’s first-ever Emmy award in September. Exclusive content has helped the streaming video service pass HBO, its archrival, in paid U.S. subscribers for the first time. Now, after gaining 262 percent this year, shares of Netflix are trading at 192 times profit, the fifth-most-expensive level in the S&P 500. The debate over whether Netflix’s epic climb is petering out or just getting started has even split a father and son. Billionaire activist-investor Carl Icahn , the stock’s largest individual holder, sold more than half his stake in October while his son, Brett, maintained his bullish outlook.