Is The Netflix Pullback a Reason For Investors to Worry?

by Zacks Investment Research | March 26, 2014 9:05 am

Is The Netflix Pullback a Reason For Investors to Worry?

Quickly and quietly, shares of glamour stock Netflix (NFLX[1]) have fallen nearly 20% from their 52-week high set earlier this month. The stock is still up slightly year-to-date, but shares are clearly in a downward trend:

1395766520 scaled 425 Is The Netflix Pullback a Reason For Investors to Worry?

It’s tough to pinpoint a single reason for the selloff. There hasn’t been any news over the last few weeks that would explain the move (other than recent reports about a potential Apple (AAPL[2])-Comcast (CMCSA[3]) joint streaming service; although shares had been selling off well before this announcement). Consensus earnings estimates have held up just fine. And there haven’t been any notable analyst downgrades that I could find.

Netflix hasn’t been the only glamour stock to take it on the chin this month either. High fliers like LinkedIn (LNKD[4]), Tesla (TSLA[5]) and Twitter (TWTR[6]) have seen double-digit declines over the last couple of weeks too.

Perhaps uncertainty overseas has led to a classic “flight to safety” among investors. Or maybe investors are finally starting to pay attention to the fundamentals again now that the Fed is unwinding its quantitative easing program and discussing a potential rate hike?

Even after its selloff, Netflix still trades at a lofty 76x 12-month forward earnings, which is well above its 10-year median of 36x. But there is some phenomenal growth projected for the company too. Based on current consensus estimates, analysts expect EPS to grow 99% this year and 78% next year.

So do you think the selloff in Netflix will continue? Or does this pullback present a good buying opportunity for investors?

Chime in below!

 APPLE INC (AAPL): Free Stock Analysis Report[7]

COMCAST CORP A (CMCSA): Free Stock Analysis Report[8]

LINKEDIN CORP-A (LNKD): Free Stock Analysis Report[9]

NETFLIX INC (NFLX): Free Stock Analysis Report[10]

TESLA MOTORS (TSLA): Free Stock Analysis Report[11]

TWITTER INC (TWTR): Free Stock Analysis Report[12]

To read this article on Zacks.com click here.[13]

Zacks Investment Research[14]

Endnotes:
  1. NFLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=NFLX
  2. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  3. CMCSA: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMCSA
  4. LNKD: http://studio-5.financialcontent.com/investplace/quote?Symbol=LNKD
  5. TSLA: http://studio-5.financialcontent.com/investplace/quote?Symbol=TSLA
  6. TWTR: http://studio-5.financialcontent.com/investplace/quote?Symbol=TWTR
  7. APPLE INC (AAPL): Free Stock Analysis Report: http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&d_alert=ZER_CONF&t=AAPL&ADID=INVESTORPLACE_CONTENT_ZER_ARTCAT_REAL_TIME_INSIGHT
  8. COMCAST CORP A (CMCSA): Free Stock Analysis Report: http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&d_alert=ZER_CONF&t=CMCSA&ADID=INVESTORPLACE_CONTENT_ZER_ARTCAT_REAL_TIME_INSIGHT
  9. LINKEDIN CORP-A (LNKD): Free Stock Analysis Report: http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&d_alert=ZER_CONF&t=LNKD&ADID=INVESTORPLACE_CONTENT_ZER_ARTCAT_REAL_TIME_INSIGHT
  10. NETFLIX INC (NFLX): Free Stock Analysis Report: http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&d_alert=ZER_CONF&t=NFLX&ADID=INVESTORPLACE_CONTENT_ZER_ARTCAT_REAL_TIME_INSIGHT
  11. TESLA MOTORS (TSLA): Free Stock Analysis Report: http://www.zacks.com/registration/pfp?ALERT=ZER_LINK&d_alert=ZER_CONF&t=TSLA&ADID=INVESTORPLACE_CONTENT_ZER_ARTCAT_REAL_TIME_INSIGHT
  12. TWITTER INC (TWTR): Free Stock Analysis Report: http://www.zacks.com/registration/pfp?ALERT=ZR_LINK&d_alert=rd_final_rank&t=TWTR&ADID=INVESTORPLACE_CONTENT_ZR_ARTCAT_REAL_TIME_INSIGHT
  13. To read this article on Zacks.com click here.: http://www.zacks.com/stock/news/127560/shares-of-netflix-are-down-almost-20-from-their-highs-do-you-think-the-selloff-will-continue
  14. Zacks Investment Research: http://www.zacks.com/

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