Market Overview

Citron Says Netflix Bulls Need A 'Reality Check'

Share:
Citron Says Netflix Bulls Need A 'Reality Check'
Related NFLX
Moderate Inflation, Positive Retail Earnings Offer Lift In Back-And-Forth Market
The Legacy Of Stan Lee: Marvel Comics Mastermind, Box Office Gold
Bulletproof Investing Performance Update: Week 50 (Seeking Alpha)

Netflix, Inc. (NASDAQ: NFLX) is the most vulnerable of the "FANG" stocks and bullish investors need a "reality check," according to a new report by notable short seller Citron Research.

What Happened

The case against Netflix's stock is simple: rival media empires, both legacy and technology focused, don't need to beat Netflix at its own game, Citron's Andrew Left said in a research report. In fact, "any form" of deceleration in Netflix's business would be "devastating" to the company. Even if the competitive landscape doesn't catch up to Netflix, should the Street re-rate Netflix as a media company and not a technology company the impact to the stock would be to the downside.

He expect the stock to "dip back" to the $340 in the bear term.

Netflix is in a unique position where it can't expand its product offering but the three other "FANG" components most certainly can, Left wrote. Specifically, Netflix can't diversify into search, hardware, social or e-commerce, but Apple Inc. (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and Amazon.com, Inc. (NASDAQ: AMZN) have already entrenched in Netflix's territory of streaming video.

New Headwinds

Netflix bulls may be overlooking a handful of new headwinds, each of which can impact the stock's performance, Left wrote. These include:

  • The combination of AT&T Inc. (NYSE: T) and Time Warner Inc (NYSE: TWX);
  • Expectations for Walt Disney Co (NYSE: DIS) to be pursue M&A deals;
  • Amazon has "billions to lose";
  • Google's focus on content;
  • Apple poaching Netflix executives; and
  • Impact from net neutrality.

Bottom line, Netflix bulls need to keep in mind the dynamics in the media industry drastically changed this week and it would be a mistake for the new dynamics to be "ignored" by long-term Netflix investors.

Investors appear unfazed by the report, with Netflix up another 2.7 percent at $390.30 Thursday afternoon.

Related Links:

Citron's Andrew Left Thinks Netflix Got 'Ahead Of Itself,' Sees Stock Falling Below $300

Netflix Has 'Unstoppable Lead' In Streaming TV, But Valuation Sends Loop Capital To Sideline

Posted-In: Andrew Left Citron Research FANGAnalyst Color Short Sellers Short Ideas Top Stories Trading Ideas Best of Benzinga

 

Related Articles (AAPL + AMZN)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LXFTKeyBancDowngrades0.0
CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Comey's Actions Broke From FBI Procedure, But No Political Bias, Inspector General Says

This Day In Market History: SEC Goes After Mafia-Linked Stock Manipulators