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Netflix ‘A Real Global Growth Opportunity’: Tilson


Netflix bull Whitney Tilson doubled down on his position Monday on CNBC, calling the online video service better than retailer Amazon.com.


On “Fast Money,” Tilson of T2 Partners said that he was comparing Netflix to what Amazon looked like 10 years ago. “Two companies, 10 years apart, very similar — and my point is, that’s the kind of upside that Netflix has if it executes well.”

Acknowledging that it was “probably the most controversial item in my portfolio,” Tilson added that he was calling out one possible outcome for Netflix, a stock for which he had the “highest conviction, but understanding it’s high risk and high volatility so it has to be sized appropriately.”

Tilson said that when Amazon held the same market cap as Netflix does now, it was taking on such competitors as Wal-Mart and held a net debt position. Netflix, by contrast, now holds a net cash position, he added.

Whitney Tilson's Best Value Plays

“It’s not a perfect analogy, but I see a very entrepreneurial company using technology to take an old product and deliver it in a new way to customers with a very high value proposition to customers. Netflix only costs 26 cents a day for its subscribers, and there’s very high customer satisfaction, and there’s a real global growth opportunity,” he said.

(Read More: Netflix Could ‘Go Crazy to the Upside,’ Whitney Tilson)

“Netflix could get on that kind of curve. I’m not saying I think it’s likely, but if there’s a 10 percent chance of a 10-bagger, it’s pretty interesting today.”

Tilson also addressed Netflix’s rising cost of licensing video content by paraphrasing CEO Reed Hastings.

“As Reed Hastings once said, he said, ‘The content providers obviously want to charge me as much as they can, but to get the content, I only have to pay $1 more than the next bidder.’ And who’s the next bidder here? Is it Hulu with less than 10 percent the subscribers of Netflix? Amazon seems willing to spend some money, but how much money are they really going to be willing to spend, given that they’re not charging anything for it, right?

(Read More: Down 30% in 30 Days - Whitney Tilson Adds to Netflix)

“There are a lot of competitors looking at this market. What I’m watching is, is looking for anybody getting real traction because there’s lots of talk, but there’s no evidence that any competitor out there is getting traction at this point.”

Posted by Bruno J. Navarro, CNBC.com Producer.

Trader disclosure: On Oct. 1, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Steve Weiss is long TOT; Steve Weiss is long HK; Steve Weiss is long QCOM; Steve Weiss is long AIG; Steve Weiss is long M; Steve Weiss is long WLP; Steve Weiss is long VZ; Steve Weiss is long VOD; Steve Weiss is long T; Steve Weiss is long CLNY; Steve Weiss is long AMTG; Steve Weiss is long MTGE; Steve Weiss is long BAC; Steve Weiss is long EUO; Steve Weiss is short VALE; Steve Weiss is short BHP; Steve Weiss is short RIO; Steve Weiss is long BBBY; Steve Weiss is short AAPL PUTS; Steve Weiss is short AKS; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long FB; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long MSFT; Pete Najarian is long TCK; Pete Najarian is long WLT; Pete Najarian is long BX; Pete Najarian is long KFN; Pete Najarian is long GS CALLS; Pete Najarian is long POT CALLS; Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long SBUX; Stephanie Link is long NKE; Stephanie Link is long JPM; Stephanie Link is long WFC; Steve Grasso is long AET; Steve Grasso is long ASTM; Steve Grasso is long AUO; Steve Grasso is long BA; Steve Grasso is long F; Steve Grasso is long LF; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long P; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long WYNN.

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