Netflix, Inc. (NASDAQ:NFLX) shares plunged as much as 5.18% on Thursday to $334.73, and sank another 0.82% to $332.76 in pre-market trading Friday. The stock has lost close to 25% of its value since last month. Netflix has underperformed the Nasdaq by about 8% this year.
David Trainer is shorting Netflix
New Constructs founder and CEO David Trainer said on CNBC’s Fast Money that Netflix, Inc. (NASDAQ:NFLX) is worth no more than $100. Trainer says the Internet streaming company has no competitive advantage. Trainer cited the company’s lofty valuation, a reversal in the momentum and broken business model to justify his point. He is shorting the stock.
David Trainer argued that rivals are eating into its market share. Amazon.com, Inc. (NASDAQ:AMZN) has jumped into the streaming business with its Fire TV. Yahoo! Inc. (NASDAQ:YHOO) has also revealed plans to boost its online programming efforts. Fierce competition will trigger a bidding war for content. Apple Inc. (NASDAQ:AAPL) is reportedly also in talks with Comcast Corporation (NASDAQ:CMCSA) (NASDAQ:CMCSK) to foray into the Internet streaming business.
Trainer said the recent explosion in the Internet streaming segment is a big reason for investors to get out of the stock. What’s more, momentum stocks trading at high levels are the first to get hit. He said Netflix, Inc. (NASDAQ:NFLX) is just a middleman that simply stores content and streams it online. Trainer added that the Reed Hastings-led company is rapidly losing its competitive edge and its pricing power in the domestic market.
Hudson Square upgrades Netflix to Buy
Netflix, Inc. (NASDAQ:NFLX) has so far maintained solid growth. Its domestic subscribers have increased by more than 20%, while its international business registered a 78% growth during the latest quarter. Hudson Square Research analyst Daniel Ernst said in a research note that concerns on competition and bandwidth costs are overstated. He has upgraded the stock from Hold to Buy, and expects the company to report a strong seasonal quarter.