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Our Communications analyst Andrew Freedman issued his original short call on Netflix (NFLX) in March 2019. The stock got hit hard after the bell today, falling over 10%, as the video-streaming giant badly missed projections for new paid subscriptions.

Below is clip from mid-April in which Freedman recapped his short thesis on The Macro Show, in particular, pushback he’s received from the bull side.

Here are a few of his counterarguments:

  • “The bull thesis is they can get to 500 million subscribers by 2025. I think that’s going to be very hard to do unless they cut price really aggressively in emerging markets.
  • “They’re past 50% penetrated potential peak adoption in developed markets, ex-U.S., so the next wave of growth is going to come from a user that’s lower margin and harder to reach.”
  • “Netflix isn’t a cable company and spending billions of dollars on movies and TV shows is different than spending billions of dollars on infrastructure and fixed assets.”

FLASHBACK | Best Idea Short --> $NFLX - z NETFLIX cartoon 01.01.2019