Netflix Shares Are Up, But Hasn't Satisfied All the Bears
*By Michael Teich*
Netflix's strong quarterly subscriber growth doesn't disguise the reality that Wall Street is grossly overvaluing the streaming giant, said Wedbush Securities analyst Michael Pachter.
"The Street is valuing the stock at more like $450 \[a share\], which implies a valuation of more like $200-$225 billion," Pachter said Wednesday in an interview on Cheddar. "That's crazy talk."
It's also nearly a 25 percent premium to where shares closed the day on Wednesday.
In order to justify a valuation that large for Netflix ($NFLX), Pachter said 200 million people ー 63 million more than currently subscribe ー would have to each pay about $100 more per year, or $8 more a month, on the service.
But adding that many users and hiking rates yet again will be tough amid intense competition from both tech and media rivals, he said.
He predicted it would take three years to hit those subscriber numbers.
As far as its monthly cost, he said Netflix can "probably get to $18-20 without competition."
"But there is competition. Competition comes from Amazon ($AMZN) at $11 a month, Hulu at $11 a month, very likely Disney ($DIS) at $15."
Still after a big miss in user growth for the second quarter, Netflix seemed to quell investor concerns when it said it added nearly 7 million subscribers globally last quarter, handily topping the 5 million that the company forecast and the 5.18 million analysts estimated.
Shares initially rose more than 15 percent after its earnings report, but ended up a little more than 5 percent.
Wedbush Securities lifted its 12-month price target to $150 a share, up from $125. That's 60 percent lower than where the stock closed on Wednesday.
For full interview [click here](https://cheddar.com/videos/the-lonely-bear-case-for-netflix).
The Federal Communications Commission knows (to loosely quote Drake) "when that [AI robocall] hotline bling, that can only mean one thing" — deception. The agency says bad actors have been using these voices to misinform voters.
David Stryzewski, CEO of Sound Planning Group, breaks down Disney’s latest results, from adding Taylor Swift to building out ESPN, and why Bob Iger’s leadership is crucial.
Kevin Cohee, CEO and chairman of OneUnited Bank, discusses the power of financial literacy and how education and technology can help bridge the racial wealth gap.
Alex McGrath, Chief Investment Officer at NorthEnd Private Wealth, discusses why the A.I. hype can’t power the market forever and how to position investments in the current market.
Paul Verna of Insider Intelligence breaks down how the company is positioned, whether they can make their streaming service profitable, and the upper limit of streaming bundle prices.
From Flamin’ Hot Cheetos to Sweet Heat Starburst, America’s snacks are getting spicier. Now, Coca-Cola wants in on the trend. The beverage giant introduced Coca-Cola Spiced, the first new permanent offering to its North American portfolio in three years.
Taylor Swift’s camp is hitting Jack Sweeney, a junior at the University of Central Florida, with a cease-and-desist letter that blamed his automated tracking of her private jet for tipping off stalkers as to her location.
