Netflix Showed Growth In Q2, But Investors May Be Jumping The Gun

Netflix, Inc. (NASDAQ: NFLX) impressed investors this afternoon with high growth. The company added 3.3 million subscribers globally vs. 1.7 million during the year-ago period.

This helped boost the stock in after hours trading, raising Netflix by as much as 10 percent.

Sean Udall told Benzinga that if you judge Netflix based on this report alone, it makes sense that the stock is going up.

"That's a huge beat on [additional subscribers]," said Udall, who serves as the CIO of Quantum Trading Strategies and is the author of The TechStrat Report. "I think the stock is just egregiously expensive and everybody has forgotten about the potential problems that could come down the pipe."

Udall is a huge fan of "Daredevil" but said that "House of Cards" has become a "terrible" show. He is not happy with Netflix's movie content and believes that Apple Inc. (NASDAQ: AAPL) will become a prominent competitor with its own streaming video service.

"The $10 pop on the stock after hours will be relatively short lived," said Udall, noting that Carl Icahn and other investors have exited their positions. Netflix managers have done the same.

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Good Growth, Bad Future?

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said that while he is "happy" with the subscriber numbers, he is "not overjoyed."

"I feel like they're hitting some decent growth," said Moorhead. "I really don't think they're gonna see big upticks until they can really attack the international markets. I really think that's where you're gonna see the big growth. I don't think investors are going to be too excited about what they see."

Moorhead also addressed the fact that Netflix CEO Reed Hastings owns fewer shares than he did before.

"I think that the directors at Netflix know exactly what's going on long-term," he said. "They understand the long-term risks and opportunities probably better than the short-term investors running up the stock right now. The reality is, there's only so much content to go around. Who's to say HBO can't come up with a package like this? They could."

That is a concern even without thinking about "what [a company] like Apple could do," Moorhead added.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.