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For the First Time in a While, Netflix a Buy: Terranova

Netflix has been a broken stock since late summer. But new developments may change that.

“The stock is above the 50-day for the first time since August,” says trader Joe Terranova. “For the first time in a while, the stock is buy.”

And Terranova isn’t the only investor making bets that Netflix has legs.

Pete Najarian tells us the volume in the March 100 calls was explosive on Wednesday. “That’s a way out of the money call – someone is betting on more upside in Netflix,” Najarian says.

Bullish expectations may stem from comments made by Piper Jaffray analyst Gene Munster in a CNBC interview, broadcast earlier in the session.

Around 10:45am ET Munster suggested that Yahoo! may be looking at Netflix – as a takeover target.

"In the back of my mind, I wonder if they buy Netflix, that would make a lot of sense," Munster said.

As you can see from the chart, the stock took off after Munster made the comments. The Fast Money traders were so intrigued they wanted to hear more.

“Now, I can’t say definitely that Netflix is going to be acquired by Yahoo!,” Musnter tells us, "but I believe that comments by the new CEO Scott Thompson make it obvious that Yahoo plans to extend their content offering. And where they’re weakest is video.”

Munster goes on to say, “and the exciting logical growing acquisition could be Yahoo!”

However during our conversation, Munster also says there are other acquisition possibilities – and suggests another company could be a better fit.

“The best option for them is Hulu,” he says. “That’s more of a logical model. It doesn’t have a legacy DVD business and it’s an advertising base model – right in the wheel house of what Yahoo! does.”

* Hulu is a joint venture partly funded by NBC Universal, the parent company of CNBC.




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Trader disclosure: On Jan. 4, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova owns APC; Terranova owns OXY; Terranova owns XOM; Terranova owns VRTS; Terranova owns IBM; Terranova owns CSCO; Terranova owns AXP; Terranova owns SBUX; Terranova owns CSX; Terranova owns SWN; Terranova owns AXP; Najarian is long AAPL; Najarian is long BAC calls; Najarian is long C; Najarian is long JPM calls; Najarian is long WFC calls; Najarian is long INTC; Najarian is long YHOO; Najarian is long GE; Najarian is long INTC; Najarian is long MSFT; Najarian is long COP; Najarian is long MOS; Finerman owns AAPL; Finerman owns BAC; Finerman owns JPM; Finerman owns IBM; Finerman owns M; Finerman owns TGT; Finerman owns WMT; Finerman owns MSFT; Seymour is long AAPL; Seymour is long BAC; Seymour is long CSCO; Seymour is long GE; Seymour is long INTC; Seymour is long MON

Brian Stutland
Stutland Equities holds hedged positions in VIX futures and options
Stutland is short NFLX, short puts, long stock
Stutland is long BP and short calls
Stutland owns AAPL
Stutland owns COP
Stutland owns KO
Stutland owns YUM
Stutland owns MSFT
Stutland owns GE
Stutland owns BP
Stutland owns T
Stutland owns INTC
Stutland owns DIA
Stutland owns KMP
Stutland owns ABT
Stutland owns AMGN
Stutland owns CTRP
Stutland owns PG
Stutland owns QSII
Stutland owns CSCO
Stutland owns DBA
Stutland owns EWZ

MacNeil Curry
No disclosures

Dan Niles
Alpha One Capital owns LRCX
Alpha One Capital owns LSI
Alpha One Capital owns TER
Alpha One Capital owns MRVL

Gene Munster
The following companies have been investment banking clients of Piper Jaffray during the past 12 months: ACOM, DANG, DRIV, MOBI, YNDX, YOKU
Piper Jaffray makes a market in the securities of the following companies, and will buy and sell the securities of these companies on a principal basis:
AAPL, ACOM, AMZN, BIDU, DANG, DRIV, EBAY, GOOG, IACI, LOGM, MCHX, MELI, MOBI, PRTS, RLOC, SINA, SOHU, VCLK, WWWW, YHOO, YNDX, YOKU

Deborah Weinswig
An employee of Citigroup Global Markets or its affiliates is a trustee of Target Corp.
Gregory Hertz, CFA, CPA, Associate, holds a long position in the securities of Wal-Mart Stores Inc.
Leo Kulp, CFA, Analyst, holds a long position in the securities of Wal-Mart Stores Inc.
Citigroup Global Markets Inc. or its affiliates beneficially owns 1% or more of any class of common equity securities of JC Penney Co Inc. This position reflects information available as of the prior business day.
Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of Dollar General Corp., Target Corp, Wal-Mart Stores Inc.
Citigroup Global Markets Inc. or its affiliates has received compensation for investment banking services provided within the past 12 months from Dollar General Corp., Kroger Co, Target Corp, Wal-Mart Stores Inc.
Citigroup Global Markets Inc. or its affiliates expects to receive or intends to seek, within the next three months, compensation for investment banking services from Wal-Mart Stores Inc.
Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services from CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Macys Inc, Safeway Inc, SUPERVALU INC, Target Corp, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp in the past 12 months.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as investment banking client(s): Dollar General Corp., Kroger Co, Target Corp, Wal-Mart Stores Inc.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, securities-related: CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Macys Inc, Safeway Inc, Saks Inc, SUPERVALU INC, Target Corp, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, non-securities-related: CVS Caremark Corp, Dollar General Corp., JC Penney Co Inc, Kohl's Corp, Kroger Co, Macys Inc, Safeway Inc, SUPERVALU INC, Target Corp, Walgreen Co, Wal-Mart Stores Inc, Costco Wholesale Corp.
Citigroup Global Markets Inc. or an affiliate received compensation in the past 12 months from Dollar General Corp..
Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Citigroup Global Markets Inc. and its affiliates ("the Firm"). Like all Firm employees, analysts receive compensation that is impacted by overall firm profitability which includes investment banking revenues.
The Firm is a market maker in the publicly traded equity securities of CVS Caremark Corp, Macys Inc, Costco Wholesale Corp.

Matthew Lamphier
First Eagle US Value Fund is long CSCO
First Eagle US Value Fund is long MSFT
First Eagle US Value Fund is long INTC
First Eagle US Value Fund is long LLTC
First Eagle US Value Fund is long TXN
First Eagle US Value Fund is long BB&T
First Eagle US Value Fund is long USB
First Eagle US Value Fund is long CINF
First Eagle US Value Fund is long BK
First Eagle US Value Fund is long AXP
First Eagle US Value Fund is long V
First Eagle US Value Fund is long MA
First Eagle US Value Fund is long BRK/A
First Eagle US Value Fund is long WRB

Greg Zuckerman
No disclosures

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