NEW YORK (TheStreet) -- Shares of Netflix (NFLX) - Get Report are down 2.44% to $86.28 in early-afternoon trading on Monday as aftershocks of Britain's unexpected decision on Friday to exit the European Union continue to weigh on markets.
Friday's vote is a negative for Netflix in particular because the company's growth story and capital investment is offshore, Needham & Co. wrote in a note cited by Barron's. If demand or currency translation slow its growth, Netflix's multiple is "priced for perfection."
"Because Netflix trades at 82x 2016E EBITDA, as profit estimates fall owing to European demand slowing OR currency translation issues, this has a heightened negative impact on Netflix's ￼valuation," the firm added.
Shares of the video streaming service could plunge 15% in a day when it underdelivers estimates, Needham & Co. pointed out.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.
Netflix's strengths such as its robust revenue growth, expanding profit margins and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and disappointing return on equity.
You can view the full analysis from the report here: NFLX
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.