Alpine Capital Management Hong Kong Alerts Investors Over Netflix

Kowloon, Hong Kong, March 22, 2016 (Newswire.com) - NetFlix Inc (NFLX), the online streaming service provider has exposed investors to a shaky start to 2016. The NasdaqGS listed stock has decline over 15% during the first quarter of 2016 with the company’s cash-flow issues being widely identified as the main reason for the investor sell-off.

Speaking to clients at it’s Hong Kong based office, Alpine Capital Management’s Chief Tech Analyst, Mr. Cai Hanchao address his concern over the medium-term performance of NetFlix.

As with many momentum based tech stocks, investors often over look financial fundamentals such as earnings growth and confuse key indicators such as subscriber growth as a fundamental for sustainable stock price growth

Mr. Cai Hanchao, Chief Tech Analyst

“We pointed clients towards NetFlix in 2013 and have continued to recommend the stock up until as late as April 2015. The position had gathered momentum and had substantially outperformed the wider market.”

“We now see a slowdown in US based subscriptions, which has compounded on top of a decreasing profit margin. As with many momentum based tech stocks, investors often over look financial fundamentals such as earnings growth and confuse key indicators such as subscriber growth as a fundamental for sustainable stock price growth.”

Bullish investors continue to maintain faith that as the company continues to execute its global strategy, declining subscriptions in the US will be offset by reaching out to international markets. However, as cash certainly appears to be scarce, value based investors will be concerned as to how the company intends to expand it’s borders without the sufficient capital requirement to maximize it’s global position.    

“Cash flow represented makes for dismal reading, especially as the company maintains an aggressive global strategy. Recent financials indicate that cash flow is negative to the tune of $245 million. Compared to the same position 12 months ago, where cash flow was negative $38 million, we see that cash flow performance has deteriorated some 535%. The figure is staggering and leaves our analysis in question as to whether management has utilized debt efficiently during the global expansion initiative,” continued Alpine Capital Management’s Cai Hanchao.

As NetFlix, now present in 130 countries, continues to expand, investors must question whether the company is able to sustain its strategy in anticipation that rapid expansion will soon begin to recover the excess cash-burn and convert the wider audience into realized profit.