Initiating Short On Netflix (NFLX)

First, let me say that Netflix (NASDAQ: NFLX) is a wonderful, innovative business. The company has strong revenue and earnings growth, generates significant free cash flow, and is expanding its market share.

However, the stock may be getting ahead of itself from a valuation standpoint.

The stock hit an all-time high today of $142.50. One-month ago the stock was trading around $100. A 42% rise in one-month would make me wary of jumping in on the long side.

The stock trades for 26 times EV/EBITDA and for roughly 41 times book value.

The forward p/e for NFLX is 37.5.

Given the impressive market rally over the past few sessions, NFLX and the overall market may be due for a pullback.

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