Netflix Warning: Bernstein Says Stock Has 37% Downside, Won't Come Close To Long-Term Expectations

Bernstein’s Carlos Kirjner mentioned Netflix, Inc. (NASDAQ: NFLX)'s mixed results for Q1, while issuing subscriber addition guidance for Q2 that was below expectations.

Kirjner maintained an Underperform rating on the company, with a $62 price target.

Q1 Results

The analyst mentioned the company’s “consolidated revenues of $1,958 million came just shy of consensus at $1,970 million, while operating income of $45 million was a few million dollars below expectations of $55 million.”

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However, both domestic and international net additions beat the consensus and the guidance.

Q2 Guidance

On the other hand, management guided to weaker-than-expected domestic and international streaming net additions for Q2, at 0.5 million domestic net adds and 2 million international net adds.

“After two quarters in a row of significant deceleration, domestic net adds were just shy of flat YoY in 1Q16. However, guidance indicated a material YoY decline in net adds going forward,” Kirjner stated.

The analyst added that it was difficult to justify Netflix's current valuation.

The stock traded recently at $96.84, down 10.7 percent on the day.