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Joe Terranova: Go Short Netflix Against $255

Shares of Netflix slipped about 5% in extended trade even after the company reported profits and revenues that beat Street estimates.

Jitters were likely generated by the company’s outlook; Netflix cautioned investors not to expect it to continue to add subscribers as rapidly as it has in the last three months.

In the current quarter, the company added 3.3 million net new domestic subscribers, increasing the total to 22.8 million.

The company also added 800,000 international subscribers, 290,000 of those added in the latest quarter. Overall, the company now has 23.6 million subscribers, up 69% from a year ago.

Some analysts had speculated that the company could pass the 30 million subscriber mark by the end of the year.

By the numbers, Netflix posted first-quarter earnings of $60.2 million, or $1.11 a share—up from $32.3 million, or 59 cents per share, in the period a year ago. Revenue rose 46 percent to $719 million, it said on Monday.

Analysts had expected revenue of $703.6 million, according to Thomson Reuters.

How should you position now?

Trader Joe Terranova suggests keeping an eye on the after hours action. “Over the last 5 quarters whatever happens in the aftermarket, on the next trading day that momentum continued,” he says. Terranova thinks if we get downward momentum on Tuesday and the stock trades below $240, "step in and play Netflix from the short side. $255 is your point of reference."

Karen Finerman thinks there are better places to put money to work. The stock trades at a very high valuation yet the momentum remains quite bullish. “Why do you have to play? It just seems too hard,” she says.

Trader Steve Grasso says much the same. Grasso’s clients tend to steer clear of Netflix.




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Trader disclosure: On April 25, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL); Seymour owns (BX); Seymour owns (F); Seymour owns (GE); Seymour owns (POT); Grasso owns (AMD); Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (C); Grasso owns (CSCO); Grasso owns (D); Grasso owns (JPM); Grasso owns (LIT); Grasso owns (LPX); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST); Grasso owns (TEVA); Finerman and Finerman's firm own (AAPL); Finerman and Finerman's firm own (BP); Finerman owns (C); Finerman and Finerman's firm own (CVS); Finerman's firm owns (IBM); Finerman's firm owns (JPM) and (JPM) leaps; Finerman owns (JPM); Finerman and Finerman's firm own (MSFT); Finerman's firm owns (TGT); Finerman owns (UNG); Finerman owns (USO); Finerman's firm is short (IWM), (MDY), (SPY); Finerman's firm is long S&P 500 puts; Finerman's firm is long Russell 2000 puts; Terranova owns (VRTS); Terranova owns (JPM); Terranova owns (V); Terranova owns (BX); Terranova owns (UPL); Terranova owns (HOC); Terranova owns (TCK); Terranova owns (BAX); Terranova owns (FCX); Terranova owns (OXY); Terranova owns (APA); Terranova owns (SLV); Terranova owns (XOM); Terranova owns (AKAM)

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