Citi disclosed its Netflix rating change Thursday morning. Shares of the video streaming company were down more than 3 percent that afternoon.
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The move comes a day after billionaire investor Carl Icahn said he sold his Netflix stake in the wake of the company announcing a 7-for-1 stock split. May noted the downgrade was not related to Icahn's move.
Netflix shares have soared more than 92 percent this year. Amid a surge that has sent the company above $650 per share, it lacks the short-term momentum to drive it higher, May contended.
He outlined some "upside scenarios" for Netflix, including a launch in Asian markets. He also noted that, at this valuation, investors will likely stay cautious until they get more information on the success of the company's expansion into markets such as France and Germany.
"We're not quite ready to give them that full value," May noted, adding Netflix has climbed about 50 percent since Citi upgraded the stock in April.
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Netflix has also shown seasonal weakness in the second and third quarters, limiting its short-term upside, May said. The company has typically been stronger in the first and fourth quarters because of series launches and users buying subscriptions in conjunction with a new holiday device.