Netflix stock appears to be one to avoid after the video-streaming company reported lower-than-expected subscriber growth, several experts said Wednesday.
Third-quarter earnings of 96 cents per share on revenue of $1.41 billion came in on par with Wall Street expectations, but the company's new subscribers were below the expected 3.02 million number. Shares ended the day at $448.59, down 0.12 percent, but sold off another 20 percent after the results were announced.
Wedbush Securities Analyst Michael Pachter who had been bearish on Netflix shares weighed in on CNBC's "Fast Money."
"I think you can call me a blind squirrel and I found a nut, but who knows if this'll last," he said. "I think the stock really has traded on domestic subscriber additions, and I think that the bulls believed that Netflix was headed to 100 or 120 million subscribers, which means, you know, 60 (million) in the U.S."
Netflix reported total subscribers at 53.06 million for the third quarter.
Also, Pachter said the disparity between net income and free cash flow was a crucial negative factor.
"It is a cumulative negative $448 million over nine quarters," he said. "That comes out to $4.40 a share that must run through the income statement some day and hasn't."
Private Advisor Group's Guy Adami said it could be a short-term "buy."
"I think you can, actually," he said. "The May low was basically-ish where we're trading around now, so if you can hold that tomorrow, that could be a huge opportunity for a trading bounce."
No way, said RiskReversal.com's Dan Nathan.
Time Warner's announcement that it would spin out HBO as a standalone streaming service spoke to increased competition for Netflix.
"If HBO pulled all of their old 'Sopranos' and all this other stuff and Netflix was left just with their two original pieces of content, HBO will cream them there," he said. "They have the ability to provide all the crap that Netflix streams that no one pays for, OK? And I'll tell you this: If there's two shows that people are signing up that Netflix gives you in a weekend, you will pay $9 for that month, you will watch them on the weekend and then you will leave."
Triogem Asset Management's Tim Seymour said he wasn't a buyer despite Netflix's broader offerings than HBO.
"But to think this doesn't speak about broader competition, 135 times valuation before today, somewhere now around 80, this is a stock you do not need to own," he said.
Brian Kelly of Brian Kelly Capital said the caveat in Netflix's net income meant future trouble for the stock.
"When this goes into reverse, Netflix is in huge trouble," he said. "Sell the rips."