Is Netflix A 'Very Cheap Stock' At Current Levels? Bill Nygren Thinks So


Netflix Inc NFLX is off to an abysmal start less than a month into the new year. After getting burned by slowing subscriber growth, shares of the streaming giant are now down more than 35% year to date.

Oakmark Funds' Bill Nygren thinks the stock has fallen below fair value.

"We think Netflix is a very, very cheap stock," Nygren said Monday on CNBC's "Closing Bell."

The Oakmark Funds portfolio manager pointed out that Netflix is trading below 25 times expected earnings and around five times revenue, which is a "very small premium to the market for a company that we think is still in its early to mid-cycle growth."

Nygren told CNBC that Netflix should be trading at a "significant premium" to the market.

See Also: Netflix Chills: Analysts React To Q4 Earnings Sell-Off, Which One Called 'Thesis-Shaking Results'

The company's customer acquisition cost has fallen below $800 per subscriber for the first time in the modern streaming era, according to Nygren. Netflix is still the clear market leader and customers are happy with subscription prices, he added: "We think it's a great opportunity today." 

Nygren is unable to say whether or not he has bought more Netflix stock, however, he made it clear that he has not exited his position.

"Obviously we can't tell you what we are doing or have been doing in the stock, but I couldn't talk positively about it here if we had sold it after last week," Nygren said.

NFLX Price Action: Netflix has traded as high as $700.98 over a 52-week period. It's making new 52-week lows during Monday's trading session.

The stock closed down 2.6% at $387.15.

Photo: Stock Catalog from Flickr.

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Posted In: Long IdeasMediaTrading IdeasBill NygrenCNBC
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