Former Netflix Skeptic Hits Buy Button
Despite being a Netflix skeptic, Whitney Tilson of T2 tells us this is the time to buy. “We bought into this stock earlier in the week,” he says.
Although he concedes that his past calls on the stock were either early or wrong he tells us, ”Today, we see a company with $4 billion market cap, down from $16 billion about 3 months ago. And on number of metrics we think that’s very cheap,” he says.
Tilson compares to Netflix to BP after the spill. “Where there’s massive negative headlines daily, it’s still a strong company underneath. I think the selling is way overdone.”
Oh sure, Tilson is aware of the bearish argument - that the company is broken and that CEO Reed Hastings damaged the brand with a sharp price increase.
But Tilson holds a different view.
"Our bet is on streaming subs," he says. "The streaming subs are still through the roof. Right now they've got a $2.1 billion revenue run rate from streaming - just their streaming business. And for a company with a $4 billion market cap, we think that's cheap."
And Tilson wouldn't be surprised if rivals see it the way he does.
"If you look at costs per subs the company is being valued at $175 per subscriber. Look at any other media company and it's a small fraction."
Tilson tells us he considers Netflix a 'juicy takeover candidate' for any number of companies including Google, Disney or Amazon .
"There are a lot of different ways to win here," he says.
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Trader disclosure: On October 26, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; J. Najarian owns MF; J. Najarian is long CIGX; J. Najarian is long CME; J. Najarian is long CBOE; J. Najarian has long call spreads SSRI; J. Najarian has long call spreads VLO; J. Najarian has long call spreads GLW; J. Najarian is short DB; Tilson is long BAC; Tilson is long C; Tilson is long GS; Tilson is long WFC; Tilson is long NFLX; Tilson is long MSFT; Tilson is long JCP; Tilson is short FSLR; Tilson is short GMCR; Cortes is short crude; Cortes is short DB; Cortes is short BAC; Cortes is short Aussie; P. Najarian is long AAPL; P. Najarian is long BX; P. Najarian is long C; P. Najarian is long MSFT; P. Najarian is long TCK; P. Najarian has long calls STI; P. Najarian has long calls FCX; P. Najarian has long calls AAPL; P. Najarian has long calls AEO; P. Najarian has long calls BP; P. Najarian has long calls CLF; P. Najarian has long calls HAL; P. Najarian has long calls NBR; P. Najarian has long calls X; P. Najarian has long calls NBR; P. Najarian has long calls X; P. Najarian has long calls SSRI; P. Najarian has long calls SLV; P. Najarian has long calls FWLT; Gartman is long gold in US dollar; Gartman is long Euro’ Gartman is long Yen terms
For Jeffry Bencik
I, Jeffrey Bencik, CFA, hereby certify that the views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers referred to in this document. Furthermore, no part of my compensation was, is or will be, directly or indirectly, related to the specific (FSLR) recommendation or views expressed in this report.
For Robert Greifeld
CNBC.com with wires.