Loop Capital moves to the sidelines on Netflix as stock touches ‘historically high valuation’

Loop Capital has cut its investment rating on streaming giant Netflix (NASDAQ:NFLX) to “hold” from a previous investment rating of “buy.” They believe the company’s shares are now approaching fair value and the stock is already at historically high valuation multiples.

The research firm said they believe NFLX has earned a price increase but simply does not need one to continue achieving its long-term growth targets and would prefer to grow the subscriber base. They noted that the company has not raised the price of its $15.49 U.S. standard tier in almost three years and is now less expensive than MAX, Hulu, and Disney+ based on the rack rate/unbundled prices.

Loop Capital estimates that the last few weeks of the quarter and the week ending December 29 could be the biggest week in NFLX history with four days of Squid Games Season 2 and the 2 NFL games.

“We upgraded NFLX almost 16 months ago on the thesis the competitors raising price and reducing spend further boosting NFLX’s competitive position, NFLX having the largest pipeline of unreleased content and global production going into the strikes, successfully implementing paid sharing, and optimistic on advertising. We believe those issues are largely factored into the stock, and the shares are now approaching fair value,” the research firm said in a note dated December 15.

NFLX PT was unchanged at $950, currently implying an upside of 3.4%. Stock is up nearly 90% so far this year while the benchmark S&P index is up 27%.