Do Hedge Funds Love Netflix, Inc. (NFLX) As Much As Analysts?

Mr. Einhorn highlights in the letter how even though the company reported EPS of $0.36 for the first quarter of the year, significantly below analysts’ consensus estimate of $0.63, its shares rallied 12% the next day and were up by almost 100% year-to-date at the end of June. He also points out how analysts who earlier were estimating the company to report EPS of $0.86 at the end of June before the first quarter results came out, quickly slashed their estimates the next day to $0.30 while still remaining aggressively bullish on the company.

According to recent reports in the media, after launching its service successfully in Japan recently, the company is on-track for its planned international roll-out and will be launching its service in South Korea around January of next year. Aside from analysts at Sanford C. Bernstein, who reiterated their ‘Sell’ rating on the stock on July 16, most analysts and brokerages that cover the stock remain heavily bullish on it, with price targets as high as $161. With analysts and large hedge funds having vastly different opinions on the stock, and Netflix itself also in the midst of a slight shift in its business strategy, it will be interesting to watch how Netflix, Inc. (NASDAQ:NFLX) performs over the next few quarters and who can claim bragging rights for predicting its success or failure.

Disclosure: None