Netflix, Inc. (NASDAQ:NFLX) has not impressed investors recently, but the company has been able to attract Mark Cuban, the owner of the Dallas Mavericks NBA franchise. Recently, Cuban made public his plans to go long on Netflix, which gives upside to the company at a time when investors are shying away.
Cuban sees hidden potential in Netflix
Cuban has a net worth of $2.7 billion and wants to take a long position on the online-video streaming company; Cuban forst expressed his plans on Twitter. In an interview on CNBC, Cuban said he is planning to add to his existing holdings of more than 50,000 shares of Netflix. Cuban told CNBC that he is not planning to sell his shares.
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According to Cuban, the company has hidden potential for growth, and the underpriced shares might encourage a takeover from a bigger media company. He noted that presently Netflix represents a perfect takeover target. Cuban also said that everything has its price and that Netflix is no exception. However, he did acknowledge that CEO Reed Hastings is not looking to sell the firm. Cuban called the streaming company as the epicenter of content and growth.
Market watchers are giving some weight to the Cuban’s thoughts on the company as a takeover target. The billionaire investor’s statement has indicated his positive attitude towards the company. This is good news for Netflix, Inc. (NASDAQ:NFLX), who is not only popular among retail investors, but also among celebrities.
Support at a right time
Netflix shares declined around 20% past week even after the results posted by the company were better than the analyst expectations for the third-quarter. The drop in the Investor confidence and share valuation can be attributed to weaker than expected subscriber growth for the quarter. Moreover, HBO recently stated that it will launch its own streaming service, which has taken Netflix investors by surprise.
Not so strong subscriber growth has taken its toll on investors’ confidence in the online streaming service, and there are some who fear that the company might repeat the decline of 2011. However, Cuban’s words come at the right time in supporting the potential of the company.
Cuban is not the first celebrity to show interest in Netflix, Inc. (NASDAQ:NFLX) shares. U.S. President Barrack Obama appeared on The Ellen DeGeneres Show last week where he talked about the House of Cards while mentioning his television preferences.