Netflix, Inc. (NFLX) Plummets After Analyst Slaps On $100 Price Tag

1
Netflix, Inc. (NFLX) Plummets After Analyst Slaps On $100 Price Tag

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.

GrizzlyRock: Long Thesis For This European Travel Company [Q1 Letter]

TravelGrizzlyRock Value Partners was up 16.6% for the first quarter, compared to the S&P 500's 5.77% gain and the Russell 2000's 12.44% return. GrizzlyRock's long return was 22.3% gross, while its short return was -2.9% gross. Compared to the Russell 2000, the fund's long portfolio delivered alpha of 10.8%, while its short portfolio delivered alpha Read More


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.

No posts to display