Netflix, Inc. (NASDAQ:NFLX) shares might have finally found their roof—at least for now—after a blockbuster trading day on Thursday. Shares rose more than 16% during the regular trading day, although they’re hovering just below Thursday’s closing price this morning in premarket trading.
Breaking past Netflix’s emotional barrier
This week Netflix, Inc. (NASDAQ:NFLX) reported earnings which exceeded expectations, which is why shares have spiked. Raymond James analyst Aaron Kessler said after the earnings report that he’s still positive on Netflix, but he maintained his Market Perform rating on it because he thinks shares are already pricing in the company’s improved outlook. He was looking at the $390 per share price target.
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According to Lawrence Lewitinn of Talking Numbers (via Yahoo! Finance), Auerbach Grayson Global Technical Strategist Richard Ross told CNBC that there’s plenty of room for Netflix, Inc. (NASDAQ:NFLX) shares to run. He notes that the new share price is right around the October high when Carl Icahn sold out of his position in the stock. He thinks that this share level represents a sort of “psychological and technical” barrier for investors
Not all are convinced about Netflix
Oxford Club Chief Income Strategist Marc Lichtenfeld has taken the opposite side and said he sees Netflix, Inc. (NASDAQ:NFLX) as being overpriced. He notes that the company generated just $5 billion in cash flow during the December quarter with only 30 million subscribers. In fact, cash flow was negative during 2013, and Netflix expects to generate $200 million in free cash flow this year. He calls the current valuation “ridiculous” because it gives shares a price-to-cash flow valuation of more than 100 times.
He also thinks Wall Street is underestimating potential negative impacts from the end of net neutrality in the U.S. Netflix, Inc. (NASDAQ:NFLX) did address the issue in its shareholder letter this week, but management doesn’t seem overly concerned, at least not right now.