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Netflix stock tumble below $500, analysts divided over fundamentals

Netflix stock tumble below $500, analysts are divided over Fundamentals

Netflix (NASDAQ: NFLX) stock price fell below the $500 mark after missing second-quarter earnings. Lower than expected outlook for the third quarter has also added to investor’s concerns.

Some market analysts are seeing the dip as a buying opportunity for long-term investors while others are predicting sluggish stock price performance for the second half of the year.

Netflix stock price soared sharply during the second quarter amid analysts’ expectations for sharp subscriber growth due to staying at home policies. But the second-quarter net subscriber addition of 10M fell short of analyst’s expectations for 12M additions. The online streaming company also missed earnings expectations by $0.22 per share.

Credit Suisse has slashed Netflix stock price ratings to Neutral from Outperform. Its analyst Douglas Mitchelson says the company lacks the habit of high cash generation potential.

NFLX Netflix, Inc. daily Stock Chart
Netflix stock price performance

Needham has also dropped the stock rating to Underperform, saying it would be difficult for Netflix to sustain the momentum and generate better performance than the second quarter.

Among other calls, Goldman provided a bullish outlook for the largest online streaming company.

“Looking beyond the current crisis we continue to believe that Netflix’s massive content investments, global distribution ecosystem, and improving competitive position will further drive financial results significantly above consensus expectations,” the firm says.

Netflix stock price plunged 10% in the last five sessions as the company now expects to add only 2.5M subscribers in the third quarter. Analysts were forecasting 5M additions. The company says the trend will carry forward in the final quarter of the year. Netflix shares are currently trading around $490, up 52% so far this year.

Bank of America stands among the bulls. The firm says that Netflix has a lot of content slate on hand to sustain the momentum. The bank claims that Netflix will continue to see lower competition from theaters and traditional TV content.    

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Author

Siraj is a finance writer based in Saudi Arabia with a strong understanding of and passion for the stock market, cryptocurrency, economics, and finance. He has worked for international clients for many years on several projects related to the stock market, equity research, accounting, and finance. Siraj is a published financial analyst on some of the largest finance websites.