Analyst Who Has Been Dead Wrong on Netflix Voices Concern on 'House of Cards' Rights

Traders are attributing weakness in Netflix NFLX shares Thursday to negative comments from Wedbush's Michael Pachter. The analyst maintains an Underperform rating and $55 12-month price target of Netflix. Netflix shares are down 0.6 percent to $168.70. Benzinga Pro note: the below comments should be taken lightly as Pachter has had quite a bad track record with his coverage on Netflix. He has maintained an Underperform rating on Netflix shares since he downgraded the stock on Nov. 30th of 2011. While Pachter did catch some downside in shares with his Underperform rating from July to September of 2011, the analyst also had an Underperform rating on the stock throughout 2010 and into the first half of 2011 as Netflix shares hit all-time highs. The Wedbush analyst highlighted a report from AllThingsD which noted "Netflix only owns the first window streaming rights to the TV series House of Cards, and not the rights to sell the show in other venues." Pachter continued, "many investors believe that Netflix's original series have the potential to place the company at competitive parity with HBO, which has 39 original series currently listed on its website. We believe that the difference between HBO's and Netflix's ownership of original content is meaningful, insofar as HBO can choose when other windows of distribution are exploited, and Netflix apparently cannot. In our view, Netflix's ability to monetize House of Cards is limited to its own platform..." Pachter believes Netflix paid around $2 million per episode of House of Cards, compared to the estimated $4.5 million per episode cost of production. "We continue to question whether the company's original content strategy is sound, particularly given the relatively high cost of production when compared to the relatively limited display rights the company receives in return," the Wedbush analyst said. Pacter's price target implies potential downside of 67 percent from where the stock is currently trading.