We all know the story of Netflix (NFLX) in 2011. For the first half of the year, the stock price grew from less than $200 to over $300. Every time Netflix made a new announcement, it seemed that the stock would reach new highs. While some investors doubted the story that Netflix was selling, for the most part they sent the stock to higher and higher earnings multiples.
Then came reality. While analysts and investors initially put on a brave face in light of Netflix’s price changes, things quickly unraveled. Many customers left, and the stock dropped like a rock, bottoming out below $70. While the stock has jumped more than 60% off of its lows, investors that bought Netflix shares near their peak have still lost more than half of their investment in less than a year.
Today, J.C. Penney (JCP) looks to me a lot like Netflix did