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Netflix stock to ‘come down hard’: Pro

Monday, 22 Jul 2013 | 1:53 PM ET
Netflix to 'come down hard': Pro
Monday, 22 Jul 2013 | 12:19 PM ET
Netflix's stock price could take a big hit within the next quarter or two, Wedbush Securities analyst Michael Pachter says.

Netflix's stock price could plummet nearly $200 per share within the next quarter or two, Wedbush Securities analyst Michael Pachter said Monday.

"I think they had a great quarter, and I think their hubris in having a sell-side analyst moderate the call, who just happens to have an uber-strong 'buy' and a comparison to HBO, is a signal that they're going to crush numbers," he said. "I think that they got a tailwind from 'Arrested Development,' and I think that that will turn into a headwind, as I think the younger people who are attracted to 'Arrested Development' churn out this quarter."

Netflix will report second-quarter earnings after the stock market closes, with BTIG analyst Rich Greenfield and CNBC's Julia Boorstin hosting the earnings call.

(Read more: Netflix earnings: Moderating an open call)

Shares traded at $261.86, down 1 percent.

On "Fast Money," Pachter said that he remained bearish on the stock for the long-term, reiterating his "underperform" rating and a $65 price target.

"I'm curious to see what they guide to for domestic streaming subscriber additions this quarter," he said. "My bet is it'll be 1 million to 1½ million, and that's enough to make the stock go up. The question is: Will they actually hit that number? If they hit that number, I have to reconsider."

Pachter also said that he was wary of the company's cash flow.

Pre-earnings, Netflix still a 'buy': Pro
Shares of Netflix look like a "buy" ahead of quarterly earnings, StockMonster's Guy Adami says.

(Read more: Pre-earnings, Netflix stock a 'buy,' pro says)

"I'm kind of shocked that investors overlook the gap between positive net income and negative cash flow so blithely. They act as if it's no big deal," he said. "They're building a library. A library has a two-year life. So, they're building something that's going to amortize really quickly, and it amortizes by turning into negative earnings pressure. I don't see earnings growth the way a $260 share price suggests."

Responding to bullish comments billionaire investor Carl Icahn made last week about Netflix, Pachter remained steadfast.

(Read more: S&P 500 heading toward 1,800: Strategist)

"A very smart investor once told me that he sold on the way down than on the way up because he never knew where the top was. That's always been my mistake. I always am too early. I've been way early on this one. I'm convinced I'm right," he said.

Icahn, Pachter added, would unload shares of Netflix when the price declines.

"They're going to be sellers on the way down, so if you start to see weakness in domestic subscriber additions, I think you're going to see Icahn sell just along with everybody else, and I think the stock's going to come down pretty hard – not this quarter, probably next," he said.

By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.

Trader disclosure: On July 22, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Joe Terranova is long VRTS; Joe Terranova is long TRV; Joe Terranova is long AXP; Joe Terranova is long OXY; Joe Terranova is long EMC; Joe Terranova is long MS; Joe Terranova is long GS; Joe Terranova is long CRUDE OIL FUTURES; Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long WFC; Stephanie Link is long CSCO; Stephanie Link is long FB; Stephanie Link is long EBAY; Stephanie Link is long GS; Mike Murphy is long BAC; Mike Murphy is long C; Mike Murphy is long FB; Mike Murphy is long LEN; Jon Najarian is long AAPL; Jon Najarian is long GLD ; Jon Najarian is long ABX; Jon Najarian is long NUGT; Jon Najarian is long BBRY; Jon Najarian is long PBR; Jon Najarian is long ITUB ; Jon Najarian is long WLL; Jon Najarian is long ZNGA.

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