Professor Damodaran is not the only Netflix skeptic. In a note to investors on Oct. 17, Michael Nathanson, a senior analyst with MoffettNathanson, said that the company’s stock price was baffling, and he estimated that a more realistic level was about $210.
In a similar vein, Michael Pachter, managing director of equity research for Wedbush Securities and a longtime critic, said he expected Netflix to continue to have difficulty matching costs and cash flow, given increasing competition in streaming video — and the likely loss of movies and TV shows controlled by its competitors.
Disney and Time Warner (which owns HBO) are revamping their offerings. And Hulu (owned collectively by Disney and Comcast), Apple, Amazon and Google (which owns YouTube) are now all serious adversaries, he said. In his estimation, Netflix stock is worth only about $150 a share.
If Netflix were to fall anywhere near that level — losing a gut-wrenching half of its market value — its corporate competitors would presumably be powering ahead with their own streaming offerings. Yet it would not be surprising if some of them — the recently merged ATT-Time Warner entity, for example — wondered whether their own marriages made much sense without Netflix’s unbidden influence.
How worried should the stock market be about Netflix? It has shrugged off such concerns most of this year: From Jan. 1 through July 9, Netflix’s shares returned a staggering 118 percent.
Since July 9, however, tech stocks have fallen and Netflix has been pummeled. Despite brief surges, its share price has dropped more than 25 percent since that peak.
Netflix executives say they are building their business for the long run. Last year, Reed Hastings, co-founder and chief executive of the company, said traditional competition didn’t worry him. Netflix was so compelling, he said, that its main adversary was sleep.
Article source: https://www.nytimes.com/2018/10/26/business/netflix-audience-stock-debt.html?partner=rss&emc=rss
Speak Your Mind
You must be logged in to post a comment.