Netflix is now down over 60% YTD: buy the dip or sell the rip?
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Apr 20, 2022
Michael Nathanson says NFLX could continue to sink in the coming months.
Shares of the streaming giant are down more than 35% on Wednesday.
Netflix stock could continue to sink
Year-to-date, NFLX is now down more than 60%. Still, Michael Nathanson warns the stock could remain challenged in 2022. On CNBC’s “Squawk Box”, the MoffettNathanson senior research analyst said:
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Netflix is not cheap enough for value investors yet. Cash flow is ultimately to the floor. So, we think it’ll keep falling until you see the turn in revenue growth, which is probably 12 to 24 months away. This is dead money in my view.
He’s cautious on streaming at large and dubs “Fox” the only buy in this space. For the rest of the players, he sees a couple more years of pain.
Nathanson has lost confidence in the forward model
According to Nathanson, there are several headwinds that could hinder recovery for Netflix Inc. He’s not convinced that the streaming companies will continue to be valued at a premium moving forward.
It’s the first time ever that I could say our confidence in the forward model is so low. You have to add advertising, you have to shut down password sharing. So, our view is that we want to stay away from the sector.
Roughly 100 million households globally use a shared password, estimates Netflix, that’s indicated a crackdown is coming.
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