Why This Asset Manager Finds 'No Value' In Netflix

Sean Emory was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. Tune in to the daily broadcast live Monday-Friday at 8 a.m. ET here.

GFG Capital Portfolio Manager Sean Emory discussed Netflix, Inc. NFLX on the show following its earnings release.

Emory pointed out that despite the market’s positive reaction, the earnings numbers were a miss.

“Clearly the market is focused on something else, and that something else is subscriber growth,” according to Emory.

During previous earnings reports, the stock had reacted according to beats or misses on subscriber growth rather than earnings, Emory highlighted, and it was the same for the latest earnings report.

Emory thought the company’s 29 percent global subscriber growth was a positive, however, it was down from 40 percent two years ago.

Over the longer term, the Portfolio Manager looked at Netflix as content company rather than a technology company, especially as other company’s would adopt similar technology, making content the differentiating factor.

Emory concluded that Netflix was a valuable service, however, he saw “no value” in the stock at its current 61x EBITDA multiple, although he would not short the company.

Netflix, Inc. recently traded at $556.88, up 17.12 percent.

Listen to the show here: