Is Flagstar the Netflix of Banking?

Flagstar's corporate team may not include Reed Hastings, but that hasn't stopped the company from losing its value.

In fact, Flagstar Bancorp

, the parent company of the Flagstar Bank chain, might actually be worse off than Netflix

. Never mind the share price; right now, Flagstar is trading in the $0.70 range, while Netflix trades at roughly $88 per share. On that alone, Netflix is the clear winner. Netflix also wins in the area of unique product offerings. Few people know that Flagstar sells consumer and commercial financial products/services in two states (Michigan and Indiana). But

in the country can tell you that Netflix is a leading streaming video and DVD-rental-by-mail service. Is it because people don't

Flagstar's financial services as much as they

Netflix? No. But if you need a bank, there are a zillion options to choose from – Bank of America

, Citibank

, Chase

, etc. With streaming video, you basically have Hulu and Netflix. Regardless, Flagstar was once a trading success story, soaring from $90.20 on December 2, 2002 to $264.10 on June 30, 2003. The stock held up well during the following 18 months, fluctuating as expected, but generally maintaining its impressive value. After 2004, however, the company began to face a steady stream of declines, eventually dropping to the abysmal low we see today. And, as I write this, the stock continues to tumble. With nothing but

for the firm, Flagstar may never be able to recover. Unfortunately, it might not have to. Earlier this year, PNC Financial Services Group

revealed its plans to acquire

in Atlanta, Georgia. Less than a month later, Flagstar announced that it was going to

. Most recently, Flagstar incurred a $14.2 million net loss in the third quarter. Can Flagstar recover? Some investors think so considering the

. But without any groundbreaking developments in the company's future (as far as we know, at least), it seems hard to believe that Flagstar could go the distance. One area where it has excelled is with its DocVelocity product, which is a part of Paperless Office Solutions, Inc., one of Flagstar's subsidiaries. In what could be regarded as the only positive press release to come out Flagstar in a long time, the company recently bragged that DocVelocity 3.0 won the award for “Release of the Year” by Mortgage Technology Magazine. Hmm, you mean to say you have not heard of Mortgage Technology Magazine? I guess that means these accolades aren't as prestigious as we thought. Sarcasm aside, Flagstar seems to be another corporation that soared without cause. While it may have once been a promising entity, it is no longer a firm that investors can count on.

If you believe in the recent rally and think that Flagstar has hope, consider the following trade:

For those who believe that Flagstar will continue to wither away, consider these alternatives: