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).
Wall Street was quiet early following a lackluster session a day earlier as markets await U.S. inflation data and high-profile corporate earnings reports later in the week.
The World Economic Forum says false and misleading information supercharged with cutting-edge artificial intelligence is the top immediate risk to the global economy.
CES 2024 starts this week in Las Vegas. It's set to feature swaths of the latest advances and gadgets across personal tech, transportation, health care, sustainability and more. Here's a list of the coolest announcements so far.
Astronauts will have to wait until next year before flying to the moon and another few years before landing on it. NASA on Tuesday announced the latest round of delays in its Artemis moon-landing program.
The Biden administration has enacted a new labor rule that aims to prevent the misclassification of workers as independent contractors. The labor department rule going into effect Tuesday replaces a scrapped Trump-era standard that lowered the bar for classifying employees as contractors
The KC-46 was to be the ideal candidate for a fixed-price development program. Instead, it has cost Boeing billions, and made industry wary of such deals.
Dave Long, CEO and Co-Founder of Orangetheory Fitness joins Cheddar to chat trends in the industry for 2024. He updates us on the company's plans to expand and what the state of the economy has meant for business.
One of the world's largest renewable energy developers will be getting hundreds of wind turbines from General Electric spinoff GE Vernova as part of a record equipment order and long-term service deal.
