This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Netflix Investors: Don't Be Wooed by an Earnings Beat

While Latin America is predominantly an untapped market, there is some trepidation regarding Netflix's expansion in the U.K. and Ireland, where Amazon's (AMZN) LoveFilm service already has a major foothold.

Comments from Netflix's third-quarter earnings conference call suggest international contribution profit will amount to a loss of $120 million in the first quarter, Wible noted. "We estimate it will take Netflix eight quarters to break even based on the challenges in the international market and comments made at their Mexican launch press event alluded to losing money in Latin America for two years."

Netflix shares have rebounded in the new year, surging more than 40% so far in 2012, making it one of the best performers on the S&P 500.

The question is how should you trade with the stock at these levels?

"Is this merely a dead cat bounce following the 40% to 50% drop since late October? Or was that drop in the stock too much and now we are readjusting to more realistic levels with a focus on potential in 2013 and beyond?" Wold asked.

The true testament for the fourth quarter will be if Netflix shows the ability to continue to grow the streaming business enough to offset rising costs and provides an indication of demand overseas.

"While neither of the two positive drivers are likely to generate upside to 2012 estimates, we believe they would not only set the stage for stronger-than-expected revenue and EPS growth in 2013, but they would also help to reinvigorate investor interest in the Netflix story -- and more realistic long-term valuation multiples going forward," Wold wrote.

-Reported by Jeanine Poggi in New York.

Follow TheStreet.com on Twitter and become a fan on Facebook.

3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs