Top analyst: Why I downgraded Netflix

Top analyst: Why I downgraded Netflix

Few stocks in the S&P 500 have performed at well as Netflix. Scratch that – no stock in the S&P 500 has performed as well as Netflix, period. So, why are analysts now downgrading it?

Netflix is hovering close to the $300 mark and yesterday, it hit its all-time high of $314.18. So far this year, Netflix is up nearly 224%.

Just a little less than four months ago, some investors were worried about the company's stock. While "House of Cards" was warmly received, another one of its gambles in original programming, a new season of "Arrested Development", aired in May to mediocre reviews. That sent the stock down more than 6%.

(Watch: Netflix: new shows bring new subscribers?)

"Arrested Development" turned out to be just a slight detour. By the time "Orange Is the New Black" premiered in July, the stock was well above $250.

Of course, anticipated demand for original programming is only one factor in Netflix's stock price. A big driver is the prospect of further global expansion. For instance, this week's pop in the stock happened when Liberty's Virgin Media announced it will offer Netflix to its 1.7 million UK customers using TiVo boxes. Netflix also announced it will begin streaming in the Netherlands.

(Watch: Why Netflix is at a new all-time high)

Yet, analysts are now downgrading Netflix's stock. For instance, Morgan Stanley lowered their opinion from "overweight" to "equalweight" today.

This comes a day after BTIG analyst Rich Greenfield also lowered his ratings on Netflix. Greenfield is talking numbers with Talking Numbers on why he downgraded the stock even though he is "increasingly impressed with Netflix's approach to consumer marketing".

To hear why Greenfield lowered his ratings on Netflix, watch the video above.

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