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DiClemente: Netflix's Real Advantage Is This

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DiClemente: Netflix's Real Advantage Is This

Nomura tech analyst Anthony DiClemente appeared on CNBC, talking about the future of FANG stocks. At one point, the expert went into Netflix, Inc. (NASDAQ: NFLX) and explained why he believes the company “will have real global leverage in media.”

So, once the service gets to 120 or 140 million global subscribers, the company will start enjoying of a real scale benefit to negotiate for content, he went on to explain.

DiClemente acknowledged that there were some technical issues (or technical selling) related to a few major hedge funds having closed out there stakes in the company. However, he said, he believes “the history of media will look kindly on Netlfix, and there’s going to be volatility because the… implied valuation of the U.S. business is to a very reasonable multiple. It’s just when you look at earnings multiples on your Bloomberg screen, they are very high because of all the investment internationally, which you have really to believe in – which we [at Nomura] do.”

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“With these high flyer names, it’s really hard to predict where the target multiples are going to go,” the analyst continued. “A lot of that depends on sentiment.”

What investors are seeing in the internet sector is very simple, DiClemente expounded. “The big are getting bigger and more powerful. When you look at Facebook Inc (NASDAQ: FB), Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) and Amazon.com, Inc. (NASDAQ: AMZN), they control more than $1 trillion of market value now. That’s too much of an advantage. They are too powerful; and when you see business models and people in the smaller and mid-size base… they are just having a hard time competing with these behemoths. And I don’t see that changing so… we continue to like Facebook and Alphabet, first and foremost,” he concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

 

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