Netflix CEO Reed Hasting is so confident in his company, his stock, that he’s buying up shares of Facebook, not Netflix. If I was a Netlix shareholder, I wouldn’t be happy about this.
In fact, Hastings not buying a small chunk of shares, no, he’s buying a boat load of Facebook shares, as in he’s buying $1 million worth of Facebook shares that is, 47,846 Facebook shares at a weighted average price of $21.03 each according to the WSJ. Facebook’s share price has been cut in half since their IPO, so I guess Hasting thinks they’re cheap. Or at least cheaper than is own stock/company.
Why buy shares of your own company when you can take a gamble and buy some shares of the largest social network in the world? Maybe there’s something else going on though.
With Netflix shares hovering around $60 a share, well off their sky high stock price of near $300, maybe Facebook might end up buying Netflix out right. Netflix has a market cap of just $3.33 billion. Facebook could afford the company and then their nearly 1 billion users would have a membership service they could purchase and Facebook would have some steady income coming through. Is that too crazy of an idea?
Reed Hasting is Facebook board member since June 2011, maybe this would rule out such a purchase or maybe it would make it all the more likely, not sure about the legal issues related to this.
Still though, if you’re a Netflix shareholder, to see the CEO buying $1 million worth of another company can’t make you too happy, especially when the stock has been hit hard the past few years. What would make them feel better, if Facebook bought Netflix for $6 billion, double Netflix’s current share price of $60.
Then again, if Facebook is going to buy your company, why wouldn’t Reed Hasting just buy shares of Netflix. Either way, it seems like an odd course of action buy the Netflix CEO.