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.
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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.