Short seller Andrew Left of Citron Research is setting his sights on high-flier Netflix Inc., noting in a tweet that the streaming company's market cap has increased by $17-billion since the beginning of March as short interest hovers near a 10-year low.
Left, known for his aggressive short calls predicting severe downturns in stock, said Netflix shares "can be shorted back down to $300 per share," which works out to 9.5 per cent below Friday's closing price of $331.44.
Netflix shares fell as much as 3.1 per cent Monday after Citron's tweet, then sank to a session low, down 3.8 per cent, after Apple Inc.'s services head Eddy Cue said at the South By Southwest conference in Austin that the company would "rather build a studio than buy Netflix". The shares are still up 66 per cent for the year, making the company the top performer in the S&P 500.
Citron's stance echoes comments last week from Stifel Nicolaus & Co.'s Scott Devitt, who downgraded Netflix to hold after having a buy rating for more than three years. The stock may have "sprinted ahead of fundamentals in the short-term," he said. Among 45 analysts who cover the stock, only three have sell ratings, while 26 recommend buying the shares and 16 say hold, according to data compiled by Bloomberg.
On March 6, Pivotal's Jeffrey Wlodarczak raised his Netflix price target to a Street-high $400 per share, arguing that as long as Netflix continues to beat estimates and issue bullish subscriber forecasts, the stock will continue to advance.