Investor optimism for Netflix is poised to collapse like a house of cards as its high-risk investment strategy could soon turn into a vicious cycle, according to a research analyst.
Video streaming giant Netflix defied gloomy market expectations when it published its third quarter results in 2016 and the positive momentum since has continued into 2017. Its share price has increased 34 percent in the past six months having closed at $129.18 on Thursday.
"In my view, Netflix's momentum in terms of its stock value is overdone in the short term. The investments they are making into new projects are so vast that the returns will struggle to match the output… I worry it's becoming a vicious circle," Neil Campling, head of global technology, media and telecom research at Northern Trust Capital Markets, told CNBC by phone.