) is expected to report earnings for its fourth quarter after the
bell on Wednesday. Consensus analyst estimates call for a loss
per share of $0.60 on revenues of $934.37 million.
The earnings report will likely be significant if for nothing
other than the move shares have had over the last few months.
Since September, shares have nearly doubled, trading up from
about $53 to around $97 on Tuesday.
Most of the move might have been based largely on a shift in
Legendary activist investor Carl Icahn took a near 10 percent
stake in the company and vowed to see it sold. Critics have
compared Icahn's Netflix investment to his once failed experiment
with Blockbuster. Still, Icahn believes that Netflix's service
would offer great value to another company.
Janney Montgomery Scott's Netflix analyst Tony Wible made
headlines last week when he turned positive on the stock,
upgrading it to a Buy from a Neutral. Wible had been a critic of
Netflix for years.
Wible built his bull case on the recent deal with Disney
) that will give Netflix Disney content in the future. He stated
that the deal with Disney might be used to facilitate deals with
other content providers, including Sony (NYSE:
Wible argued that this might be indicative of a broader shift
in the content universe, where as Netflix pulls subscribers from
traditional cable providers, the content providers themselves are
more likely to give Netflix favorable deals.
Wible also cited the broadly bearish sentiment (Netflix has a
short interest near 25 percent) and competition that was largely
Not everyone agrees with Wible, however.
Eric Wold, B. Riley & Co.'s Netflix analyst, has a Sell
rating on the stock and a $45 price target. Wold believes that
the stock could drop after earnings.
Wold told Benzinga he was concerned with the company's content
costs. In contrast to Wible, Wold believes that the Disney deal
could burn Netflix shareholders, who might even have to sit
through some capital raises.
"When Netflix lost their deal with Starz, they downplayed the
importance of Disney," Wold said. "Netflix said Disney was only
about 2 percent of streamed content."
Michael Pachter of Wedbush is also skeptical of Netflix's
content costs. He has an Underperform rating and $45 price target
"Why was everyone so dismissive when they lost Starz?" Pachter
told Benzinga. "Starz was Disney plus Sony plus original content.
Now they are getting back Disney, but paying more for it."
Still, Pachter doesn't believe this quarter will be one for
the bears to celebrate. "[Netflix] could go up after earnings.
But it's still a house of cards."
Shares of Netflix traded near $97 on Tuesday, down about 2
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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