KUHN CAPITAL Wednesday, October 18, 2017
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IPO Market Pix Netflix

Netflix, online purveyor of DVD movie rentals, was welcomed by a receptive IPO market yesterday, raising $82.5 million on a stock that opened at $15 and closed at $16.75.

Netflix's success proves out investor Peter Lynch's axiom: invest in what you know and like. The company's model is a rare, elegant exploitation of Internet efficiencies.

Users pay a fixed monthly fee to order from Netflix's selection of thousands of DVD's that are then sent through the mails, no more than three (depending on the plan) outstanding at any one time. The DVD is packaged with a return-addressed and postage-paid envelope.

So the faster you turn around your DVD, the more movies you see per month, and no Blockbuster usurious penalties on late returns! The model's only weakness is its dependence on USPS' diffident delivery service.


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