Why Did Citi Downgraded Netflix Even Though It Still Likes The Stock? Mark May Explains

Citi Internet analyst, Mark May, downgraded Netflix, Inc. NFLX to Neutral from Buy on Thursday arguing that the stock currently trades just 6 percent lower than Citi's price target of 6 percent and is not poised to hit Citi's 'upside' $950 mark anytime soon.

May was on CNBC recently to explain the reasons behind this downgrade.

Adequately Valued Right Now

"We upgraded this stock just back in April actually and the stock is up [now] 50 percent since we upgraded and it's price objective," May began. "And our price objective really is in mid to low-$700s, I think, is fully valuing really all the countries that Netflix is already launched into. So, we are stepping to sidelines, kind of taking our profits and feel like at this level the valuation is fully reflecting the positive times that the business is seeing."

Not Giving Credit For Countries They Are Yet To Launch

May was asked why he downgraded the stock right now when he still likes Netflix. He replied, "We have published some upside scenarios [...] actually even over $950 [billion]. In order to do that we have to start giving them credit or value for countries that they are likely to launch in the future. Countries like South Korea, China, India."

"This would really represent there launch into the APAC region over the next couple of years and we are not quite ready to give them that full value at this point in time. And I don't think investors will until we get more data from them about how traction is going in some of the more recent markets that they have entered into like Germany and France and so that's why we are hedging it to get that aggressive at this point," May concluded.