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Netflix's business model is unsustainable, and it will hurt the company in the long run, New York University professor Aswath Damodaran said Tuesday.
"They are in a cycle that they can't get out of," Damodaran, who is known as the "Dean of Valuation," told CNBC's "Squawk Alley. "
"They borrow money, they make more movies and more original content, they get more subscribers, and then they go to the market to try to push up the market price and then use that to borrow more money," Damodaran said. "I don't see a way they get out of this cycle."
Netflix said last week it added 6.96 million subscribers in the third quarter, as domestic and international additions topped analyst expectations. The company also emphasized production of its own content — which includes shows such as "Stranger Things" and "Big Mouth" — over licensing content.
But while Netflix's subscriber growth will slow at some point, the company will have to continue to churn out content at its current pace, Damodaran said.
"It's not as if they can slow down the production of content once their subscribers hit the cap, because they're training those subscribers almost to expect 20, 25 new shows every year. That's not sustainable," he said.
Netflix declined to comment.