Is Netflix Cheap Now? (NFLX)

In a stunning move, Netflix Inc. NFLX has started negotiating with two of Hollywood's biggest names for an original show, worth up to $100 million. This could potentially make shares of Netflix cheap at these levels, if all goes according to plan.

The story was first reported by Deadline Hollywood yesterday.

The series is a political drama called "House of Cards," and is based on a British miniseries. David Fincher would direct the series, and Kevin Spacey would star in it, which if it goes through, would be the biggest shot at pay stations like Time Warner's TWX HBO yet.

As part of the deal, Netflix would pay perhaps over $100 million for 26 episodes, though according to the Wall Street Journal, a person familiar with Netflix's plans said the company is likely to pay much less than that.

Spacey's spokeswoman, Staci Wolfe, confirmed the talks yesterday. A representative for Mr. Fincher, said he was traveling to Europe and couldn't be reached. A spokeswoman for Media Rights Capital II LP, the production company financing the series, declined comment.

Under the terms of the agreement, Netflix would carry the series before any other outlet, but Media Rights Capital would be free to make arrangements for later broadcast or DVD sales, according to a source close to the deal.

If Netflix is able to get "House of Cards," this could lead to additional series being shown on Netflix exclusively, which would no doubt boost subscriber numbers, and could potentially make Netflix shares here a bargain. Yesterday, Goldman upgraded the stock and put a $300 price target on shares, some $80 away. The company has more than 20 million subscribers paying around $9 per month, in compared to around 28 million subscribers for HBO.

Netflix saw a 63% rise in subscribers from Q4 2009 and Q4 2010. Customers love the company's streaming service, as it has been expanded on more platforms than just your computer, like videogame consoles, television sets and other devices.

This could be potentially a humongous deal, and traders are liking what they are seeing so far, as traders are bidding up shares 2.5% in pre-market on this news.

When Goldman's report came out yesterday, saw gaffed at the price target, and brushed it off. It looks like Goldman knew more than they were letting on, and perhaps a $300 price target is justified.