Netflix (NFLX) Doubters Grow; Raymond James Cuts to Underperform
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Price: $555.12 -3.92%
Rating Summary:
43 Buy, 27 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 2 | Down: 3 | New: 2
Rating Summary:
43 Buy, 27 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 2 | Down: 3 | New: 2
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Shares of Netflix, Inc. (Nasdaq: NFLX) are lower again Monday after another Wall Street analyst slapped the equivalent of a Sell rating on the stock.
Raymond James' Aaron Kessler lowered his rating on the streaming video provider from Market Perform to Underperform, saying streaming subscriber growth could be more challenging than the company or shareholders are expecting and domestic competition continues to intensify.
Kessler notes that after growing from 9 million paid subscribers at the end of 2008 to 21 million at the end of the first quarter of 2011, growth has since leveled off. This is potentially related to the law of large numbers and rising competition. The firm's analysis of Google search data indicates while searches for "Netflix" were up strongly since 2008, data in the first quarter of of this year shows that searches were approximately flay year-over-year. Also, even though Netflix has 22.8 million domestic subscribers currently, the company churned off 31 million subscribers over the past three years. This may indicate that Netflix may have already reached over half of its U.S. addressable market, the analyst notes.
Commenting on intensifying domestic competition, Kessler notes main competition from Amazon, Hulu, HBO, and Showtime, though he believe other players including Google, Apple, and the recently announced Redbox/Verizon joint venture and Comcast "Xfinity Streampix," could become more competitive as well. "We expect competition to limit Netflix’s sub growth and continue to drive up content pricing," he said.
The firm sees Netflix's domestic streaming segment losing approximately $35 million in 2012.
Shares of Netflix last traded at $108.84, down 2.5 percent.
Raymond James' Aaron Kessler lowered his rating on the streaming video provider from Market Perform to Underperform, saying streaming subscriber growth could be more challenging than the company or shareholders are expecting and domestic competition continues to intensify.
Kessler notes that after growing from 9 million paid subscribers at the end of 2008 to 21 million at the end of the first quarter of 2011, growth has since leveled off. This is potentially related to the law of large numbers and rising competition. The firm's analysis of Google search data indicates while searches for "Netflix" were up strongly since 2008, data in the first quarter of of this year shows that searches were approximately flay year-over-year. Also, even though Netflix has 22.8 million domestic subscribers currently, the company churned off 31 million subscribers over the past three years. This may indicate that Netflix may have already reached over half of its U.S. addressable market, the analyst notes.
Commenting on intensifying domestic competition, Kessler notes main competition from Amazon, Hulu, HBO, and Showtime, though he believe other players including Google, Apple, and the recently announced Redbox/Verizon joint venture and Comcast "Xfinity Streampix," could become more competitive as well. "We expect competition to limit Netflix’s sub growth and continue to drive up content pricing," he said.
The firm sees Netflix's domestic streaming segment losing approximately $35 million in 2012.
Shares of Netflix last traded at $108.84, down 2.5 percent.
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