This Day On The Street
Continue to site right-arrow
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 Momentum Must Reverse Soon, Claim Short-Sellers: StockTwits

Stocks in this article: NFLX DIS AMZN

NEW YORK (TheStreet) -- Netflix  (NFLX) shorts are shocked. Shares of the on-demand video company are up 31% in the past month, and the stock shows few signs of losing momentum.

But a majority of investors on say it's just a matter of time before Netflix sells off -- fast. 

Sentiment on the stock is 57% bearish, according to StockTwits analytics. The reason is that Netflix's multiples just don't make sense to fundamental traders. The company has a near-$26 billion market cap and trades at nearly 63 times forward 2015 earnings. That's an unheard-of price-to-earnings ratio for a media company. Disney  (DIS) trades at 18 times 2015 earnings, for comparison. 

$NFLX This is just prime for a major pullback. Must be insane to buy up here ? Mark Smith (@darwinlives) Jun. 6 at 10:02 AM

$NFLX Adding to short list here. Fundamentals don't support the valuation, highly unlikely to have long term gains from here. ? Sean (@LSValue) Jun. 6 at 09:48 AM

Netflix gained recent positive momentum from two announcements: price increases and European expansion. The company raised its price for streaming content from $7.99 to $8.99 a month.

It also announced plans to expand beyond Northern Europe into other broadband-heavy European countries including Germany, Austria, France, Belgium and Luxembourg. And some bullish investors believe that Netflix's European prospects give the company plenty of upside.

$NFLX buy every dip!!! ? DJS (@Dsteigerct1) Jun. 6 at 09:27 AM

But most investors on say Netflix can't sustain its valuation. Content costs and competition will ultimately eat into Netflix's profits, they argue, and the bulls driving the stock higher will realize that it can't grow into its valuation.

Netflix spent $65.93 million to acquire DVD content in the last three months of 2013. That's up from $48.28 million from the same period a year ago. It spent another $14.9 million on its DVD library in the first three months of the year, though that was slightly less than the $21.2 million it spent during the same quarter in 2013.

1 of 2

Select the service that is right for you!

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 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • 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