How to trade Netflix, Inc. (NFLX)

Netflix, Inc. (NASDAQ:NFLX) has posted impressive second-quarter results with earnings coming in at $1.15 a share at the back about $1.34 billion in revenues that beat estimates of $1.33 billion. Despite posting impressive second-quarter results, AdvisorShares portfolio manager, Brad Lamensdorf, in an interview on CNBC reiterated a short position in the company’s stock, citing the company’s outdated business model.

Netflix, Inc. (NASDAQ:NFLX)

Brad Lamensdorf has a lot of concerns on the company’s model that is 50% reliant on the DVD model which according to him is a ‘dying business’. Lamensdorf also raised concerns about the company’s use of most of its revenue to pursue international growth without converting some of it into free cash flow.

“When you look at their business model, when you really look at what they have, 50% of their business is in the DVD business which is a dying business. It is going away,” said Mr. Lamensdorf. It is not the first time that the analyst had maintained a short position on the company reiterating they did the same before Carl Icahn, got involved with the company.

Mike Olson of Piper Jaffray on the other hand, reiterated a ‘Neutral’ rating on the company’s stock echoing Lamensdorf concerns that most of the investors are mostly focused on free cash flow. Investors have also been watching how Netflix, Inc. (NASDAQ:NFLX) is driving its sub growth especially with the ongoing focus on suburbs, which are expected to drive the stock in the coming months.

“In general, right now investors are just focused on specifically sub growth and so if they continue to drive the subads that are going to be what is driving the stock. I think long term this is going to turn into a story that is more about cash flow and valuation,” said Mike Olson.

Netflix, Inc. (NASDAQ:NFLX) is currently performing extremely well in the domestic market with the ongoing expansion in the international market also looking good. As the company rolls out into more countries according to Olson, profitability levels could slightly be affected but as long as subs growth are there the stock is destined to continue growing.

Disclosure: none

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!