Albert Fried & Co Drops Coverage on Netflix, Admits They Were Wrong

In a note published Tuesday, Albert Fried & Company LLC analyst Rich Tullo unapologetically dropped coverage, rating and estimates on

. Tullo admitted, “We (I) have been wrong on NFLX shares as we (I) have rated it Under Weight and now the shares are among the most highly valued by the stock market in 2013 on virtually every metric from P/E Ratio to EV/Sales.” The analyst responded defensively that investors have been “irrational” and have not assigned a rational risk weighting to a company with strong competition. Albert Fried & Company sees Netflix as an example of a delayed cost model and noted that the company is in the lowest quartile in terms of EBITDA margins. Tullo maintained his views on Netflix throughout the report stating, “I don't believe NFLX can ever post 90,000 million domestic subscribers or earn $5 never mind $50 per share. I don't believe (excluding Orange is the New Black, and House of Cards) any of NFLX Originals are in the top quartile of NFLX TV views, and I doubt NFLX's International Margins will surpass +9%. I believe NFLX has a dying business in DVD's and will lose about 30% to 50% of the streaming content driving subscriber growth.” Netflix closed at $368.17 on Tuesday and is currently trading down as much as 2.04%.