Those who bet against the Netflix, Inc. (NASDAQ:NFLX) think that the valuation of the company is much higher that what it should ideally be. Option Action traders, Michael Khouw, Dan Nathan and Carter Worth and CNBC’s Mandy Drury about their view on Netflix in CNBC.
Netflix, Inc. (NASDAQ:NFLX) has grown significantly in the last few quarters and considered by many as the top streaming company. In spite of this, many analysts placed a bearish bet on the streaming company. Worth thinks that the Netflix, Inc. (NASDAQ:NFLX) has reached a difficult level and performed lighter relative to the market in the last 3-4 weeks.
“[…] We think that this is the stall, the sign, and ultimately it’s going to roll over, and given the amount of time we have, we are inclined to stay,” Worth said.
Khouw pointed out that there was a long standing opinion on Netflix, Inc. (NASDAQ:NFLX) that they were going to see an increased content cost. But, he thinks that they solved that problem by creating a lot of content on their own. Some of these contents, created by Netflix were very successful.
Khouw also said that Netflix, Inc. (NASDAQ:NFLX) is changing their game by creating their own content. He also insisted that he plans to stay on with Netflix till the next big opportunity. Netflix stepped into a new category of content like comedy shows. They recently launched five new comedy shows, which includes Bill Cosby.
Nathan thinks that the Netflix, Inc. (NASDAQ:NFLX) are coming out of their playbook with the comedy specials. HBO pioneered the one man comedy show concept for many years.
“[…] When you talk about House of Cards, when you talk about ‘Orange is the New Black,’ there is tremendous cost in producing these sorts of shows. There is not a whole lot of cost in producing one man comedy shows,” Nathan added.
He also considers that Netflix, Inc. (NASDAQ:NFLX) might keep doing these kinds of shows. Khouw said that Netflix streams almost 90% of TV shows, but added that he could not digest the valuation of Netflix and did not mind placing a bearish bet on them.