NEW YORK (TheStreet) -- Netflix (NFLX) gained in overnight trading following its announcement that earnings for the quarter ending in March were 86 cents per share, three cents ahead of estimates, on revenue of $1.27 billion, 24% higher than a year ago.
Netflix shares have more than doubled in value over the last year, although they fell more than 20% recently as investors have switched from growth stocks to value plays.
Well, here are four reasons to be bearish:
First, valuation. Netflix currently trades at an Amazon-like price-to-earnings ratio of 131. Even after the stock's recent decline of more than 20%, that's way too rich for the current market.
Even Amazon (AMZN) itself can no longer sustain such lofty valuations. It's down 17% so far in 2014. Netflix, meanwhile, is down just 5.3%. It has not fully adjusted to the new market environment.
And speaking of Amazon, few analysts understand that even at $99 a year, Amazon Prime is pricing its video library at a Netflix price, and throwing in free shipping to boot. That's some serious price competition. Amazon also has original programming, just as Netflix does, and devices under its own control, including the Kindle Fire line, something Netflix does not have.
Second, House of Cards. Netflix says in its earnings letter the series "attracted a huge audience that would make any cable or broadcast network happy." Pretty words, but where are the numbers? Netflix has them, but won't say what they are.
Without numbers we can't make an apples-to-apples comparison between how Netflix is doing and how other networks, such as HBO, are doing. It's all smoke and mirrors. That may be great for Frank Underwood, the Kevin Spacey lead in the House of Cards series, but for investors it's not so great.
Third, the price hike. Netflix says in its earnings letter that it added 2.25 million subscribers in the U.S. during the first quarter of 2014, and 4 million overall. How are the next four million going to react to paying more for the service than current customers? The nature of the price hike seems geared toward discouraging growth, at least in the short term, until the pain is shared by all customers.
An RBC Capital Markets survey in March showed Netflix surpassing Google's YouTube as the most-watched streaming service and RBC itself is bullish on the shares.
But is Google (GOOG) going to take that lying down? Aren't Amazon and Hulu and the rest of the pack chasing Netflix going to pounce on this price hike in their own marketing? And what will that mean for the coming quarter?
Fourth, as Jimmy McMillan might say, the rent's too high. Netflix CEO Reed Hastings is pounding the table against the planned merger between Comcast (CMCSA) and Time Warner Cable (TWC), complaining that Comcast has already been "able to capture unprecedented fees from transit providers and services such as Netflix," and that the merger would give it "even more anticompetitive leverage to charge arbitrary interconnection tolls for access to their customers."
But as I and others have noted, the death of net neutrality in these fees is greatly exaggerated. Netflix is playing politics, claiming a harm that so far does not exist, again like its character Frank Underwood.
Still, Comcast is a definite threat. Comcast owns tons of programming through NBCUniversal, and probably streams more "free" content to its subscribers than Netflix might ever hope to have. It also has vertical integration on live sports that Netflix will never have. Its market cap of $130 billion is more than six times that of Netflix, which is still less than $21 billion.
When the Time Warner Cable merger is complete, Comcast will have as many broadband Internet subscribers as the three remaining phone giants -- AT&T (T), Verizon (VZ), and CenturyLink (CTL) -- combined.
At some point investors may figure out that, between the two firms, Comcast has a much better hand than Netflix, based on how Netflix defines itself. Just one more reason to be bearish on Netflix.
At the time of publication the author owned shares of CMCSA, AMZN and GOOG.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.