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TheStreet Open House

Why Netflix (NFLX) Is Falling on Friday

NEW YORK (TheStreet) -- Netflix (NFLX) is sliding over the afternoon trading session on Friday, victim to a broad selloff among high-momentum tech and biotech stocks on the Nasdaq.

By late afternoon, shares had taken off 4.4% to $339.06. Trading volume of 4.3 million had exceeded its three-month daily average of 2.6 million.

The decline is the second consecutive day of losses suffered by the streaming company. Since Thursday, the stock has dropped 6.6%, in line with the Nasdaq's 3.4% fall.

Other heavy volume decliners include E*Trade Financial (ETFC), down 8.1%, TripAdvisor (TRIP), down 5.9%, and Facebook (FB), down 4.4%.

Must Read: Warren Buffett's 10 Favorite Growth Stocks

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TheStreet Ratings team rates NETFLIX INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NETFLIX INC (NFLX) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 24.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 507.69% and other important driving factors, this stock has surged by 91.43% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • NETFLIX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, NETFLIX INC increased its bottom line by earning $1.85 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($4.04 versus $1.85).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 513.1% when compared to the same quarter one year prior, rising from $7.90 million to $48.42 million.
  • The gross profit margin for NETFLIX INC is currently very high, coming in at 82.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 4.12% is above that of the industry average.
  • You can view the full analysis from the report here: NFLX Ratings Report
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