The Netflix rally has continued unabated, with a 50 percent rise in the stock since the start of April. And that has left those short the richly valued name licking their wounds.
"It was a very painful experience," admitted Boris Schlossberg, a trader who was short the name for a year and a half. "And I think the key takeaway here is that you can never, ever, ever short a stock on pure valuation concerns alone."
By most measures, Netflix is indeed expensive. The stock is trading at a forward price-to-earnings ratio of 278, which is a gargantuan premium to the S&P 500's arguably rich P/E of 17 and change.
A comparison of the top-line to the share price hardly makes it more reasonable, as the stock has a forward price-to-sales ratio of 5.1. That means investors would theoretically prefer to have 1 percent of Netflix's shares than 5 percent of its total sales over the next year.
Of course, that's because investors expect to see massive growth for the company, as it expands its reach internationally and perhaps charges each customer more without itself paying much more for the content it is showing.
With so much emphasis placed on an uncertain future, the name has naturally become divisive among analysts and investors alike. One bearish analyst even went so far as to compare himself to a Keanu Reeves character, given that like Neo, he is "the only person who sees the matrix."