Alternative Investment Report

Peter Andersen dubs Netflix Inc a ‘real stinker’

Netflix Inc (NASDAQ: NFLX) continues to dwell under $200 a share – a level that’s unprecedently attractive for many. Still, Andersen Capital Management CIO says the streaming giant is a “real stinker”.

Andersen’s bleak outlook on the Netflix stock

According to Peter Andersen, the stock down more than 70% from its all-time high remains unappealing because Netflix has an obsolete business model. On CNBC’s “Power Lunch”, he said:

Netflix is one of the companies whose business model is broken. It did see some very attractive performance and demand during the pandemic, but strip that away, the business model just isn’t durable enough to go into the future.

In April, Netflix Inc said it could lose up to 2 million subscribers in its current fiscal quarter. A 10% growth in its Q1 revenue had also come in shy of Wall Street expectations.

Andersen doesn’t like the Netflix algorithm

Andersen also has a bone to pick with the Netflix algorithm that he says is not very user-oriented. In the long run, therefore, it could stand in the way of growth as well. The CIO noted:

Many people on Netflix spend maybe ten or fifteen seconds on a movie and decide it’s not for them. But the algorithm builds that into your suggestions for future movies. So, it’s almost like a death spiral.

A few of the other notable names that he throws in the same category of “real stinkers” include, Peloton Interactive, Carvana, and Zillow Group – all down big from their record highs.

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