Whitney Tilson Talks Turkey on His Albatross (NFLX)
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Whitney Tilson weighed in on the thorn in his side... Netflix (Nasdaq: NFLX).
In a note to clients, Tilson said the company "probably" did the right thing by raising $400 million and he hasn't changed his long position on the stock.
Tilson highlights the cash raise more than triples the company's net cash position from $166 million to $566 million and removes nearly all liquidity risk.
"When you're betting on a medium- to long-term turnaround, you first have to make sure that the company doesn’t hit a cash shortfall in the short term," Tilson said. "We believe that Netflix will start to grow and thrive again in a year or two, but neither we (nor the company or anyone else) can predict with certainly what will happen in the next 12 months, so this capital raise is a good insurance policy."
While attempting to look at the bright side of the capital raise, Tilson admits it is "irritating to see a company we own issuing stock at 1/3 the price at which it was buying it only months ago."
On the lowered guidance from Netflix, Tilson said when asked on the third-quarter earnings conference call whether management expected Netflix's second half of 2012 profitability to overcome the losses guided for early 2012 -- meaning to break-even for FY 2012 -- management replied that it had not yet guided the latter half of 2012. With the offering Monday afternoon, Netflix said it now sees a consolidated net losses for the year ending December 31, 2012.
While clearly getting hurt big on Netflix, Tilson mentioned he is still short Salesforce.com (NYSE: CRM) "in size" and Green Mountain (Nasdaq: GMCR) remains T2's largest short position.
In a note to clients, Tilson said the company "probably" did the right thing by raising $400 million and he hasn't changed his long position on the stock.
Tilson highlights the cash raise more than triples the company's net cash position from $166 million to $566 million and removes nearly all liquidity risk.
"When you're betting on a medium- to long-term turnaround, you first have to make sure that the company doesn’t hit a cash shortfall in the short term," Tilson said. "We believe that Netflix will start to grow and thrive again in a year or two, but neither we (nor the company or anyone else) can predict with certainly what will happen in the next 12 months, so this capital raise is a good insurance policy."
While attempting to look at the bright side of the capital raise, Tilson admits it is "irritating to see a company we own issuing stock at 1/3 the price at which it was buying it only months ago."
On the lowered guidance from Netflix, Tilson said when asked on the third-quarter earnings conference call whether management expected Netflix's second half of 2012 profitability to overcome the losses guided for early 2012 -- meaning to break-even for FY 2012 -- management replied that it had not yet guided the latter half of 2012. With the offering Monday afternoon, Netflix said it now sees a consolidated net losses for the year ending December 31, 2012.
While clearly getting hurt big on Netflix, Tilson mentioned he is still short Salesforce.com (NYSE: CRM) "in size" and Green Mountain (Nasdaq: GMCR) remains T2's largest short position.
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