Netflix Inc (NFLX) To Be Less Valuable Than Micron Technology Inc (MU); House Of Cards A Good Cure For Insomnia: David Einhorn

Coming back to Netflix Inc. (NASDAQ:NFLX), on April 15, when the company announced its first quarter results, something really surprising happened: the analysts expected the earnings to come in at $0.63, while Netflix reported significantly lower earnings of just $0.36, which should be extremely negative news, shouldn’t it? Of course, it should, but not in the case of Netflix, whose price reaction was completely the opposite, since after the announcement its shares went up by 12%, and finished the second quarter among the top gainers in the S&P 500. In the letter, Einhorn explains it in a way that Netflix “pushed its promises into the distant future, with grand hopes for the decade starting in 2020”, meaning higher spending today makes investors believe that they will eventually transfer into an increase in future profits. Einhorn also took a shot at Netflix’s vaunted original series House of Cards, saying “Further, we had just finished watching season three of NFLX’s leading original content show, House of Cards, which appeared to be scripted to compete with Ambien.” Ambien of course, is a leading insomnia medication.

Needless to say, Einhorn did not report owning any shares of Netflix Inc. (NASDAQ:NFLX) as of his most recent 13F filing, believing that it’s overvalued and part of a select group of companies that get preferential treatment among investors for their “exciting stories”, while not being held accountable for current performance. Tesla Motors Inc (NASDAQ:TSLA) is arguably another of these stocks (our words, not Einhorn’s). Coatue Management, headed by Philippe Laffont, topped the list of the largest shareholders of Netflix Inc. (NASDAQ:NFLX) that we track, finishing the first three months of the year with 1.76 million shares valued at $734.69 million. Netflix is up by a guady 107.21% year-to-date

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