Netflix Shares Go on a Wild Ride

Analysts give conflicting signals, whipping the stock around

By Tom Taulli, InvestorPlace Writer & IPO Playbook Editor

Yesterday the shares of Netflix (NASDAQ:NFLX) spiked 11%, capping a 35% gain for the past week. But as for today, the shares are blowing off some steam — off by about 8% to $67.83.

What’s going on? Blame the volatility on Wall Street analysts.

On Monday, Morgan Stanley’s (NYSE:MS) Scott Devitt put an “overweight” rating on Netflix as well as a price target of $85. He thinks that the threat from (NASDAQ:AMZN) is overblown because the e-commerce giant will probably not have as much content. After all, Netflix has been creating its own shows.

Another bull is Citigroup’s (NYSE:C) Mark Mahaney, who believes there will be an inevitable shift from television to the web, tablets, smartphones and Internet TVs. No doubt, Netflix will be a big beneficiary.

However, some analysts are not so rosy on the company’s prospects. For example, Lazard’s (NYSE:LAZ) analysts believe that the market opportunity for Netflix is limited because it does not have enough resources to license premium content.  There will also be competition from players like Viacom (NYSE:VIAB) and Disney (NYSE:DIS).

And then today Bank of America Merrill Lynch (NYSE:BAC) analyst Nat Schindler warned investors that Netflix’s stock has gotten too pricey and is due for a correction. His price target is $72.

It all adds up to a roller coaster for investors — hold on tight.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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