Zacks Investment Research is only maintaining a very mixed “Neutral” rating has new holiday data on e-commerce showing that there is even more concern ahead. Research firm ForeSee noted that Netflix has lost a full seven points this year to post a score of 79 and that is at par with the index average. Netflix was actually the joint leader in the 2010 and has historically been a leader, indicating that there is growing disappointment.
Netflix’s decline in the index was unsurprisingly attributed to the raising the prices and due to the splitting its DVD and video-streaming services. Even having backed away from some decisions after losing 800,000 subscribers did not stem the exodus and the market value was cut by about 75% to under $4 billion. Netflix also gave a dismal outlook and the belief is that the problems will persist. Can a company go from an earnings growth story to an EBITDA story? Most likely not.
You do not need to use any outside research for this realization: Amazon.com Inc. (NASDAQ: AMZN) won at the expense of Netflix. Apple Inc. (NASDAQ: AAPL) is rumored to be releasing some variation of Apple TV that could be an a la carte service but even if not it could still pose a serious disruption to Netflix.
Read Also: The Worst Product Flops of 2011
Netflix shares are down another 1.2% on Thursday at $68.25 and the 52-week trading range is $62.37 to $304.79. If you want a great lesson from a guy who knows how to pick out losers and bet against them, go back and review the short sale call from Asensio more than a year ago. His call took some time to play out, but he was almost spot on.
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JON C. OGG
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