Regardless if consumers are stuck at home or not, the public wants to be entertained, Wedbush Managing Director and Equity Analyst Michael Pachter said Monday on Benzinga's PreMarket Prep.

What To Know

The American consumer can't go to a live sporting event or concert, nor can they go to the movie theaters, Pachter said. As such, the only form of entertainment available is at-home options, like streaming video.

"It's like saying you stay at the buffet for an hour longer and you eat an extra pound of food," he said. "Well, the buffet doesn't charge you any more. You already paid to get in."

Related Link: How The COVID-19 Pandemic Turned Amazon, Netflix Into Essential Businesses

Why It's Important

There is no doubt Netflix is gaining new customers and existing customers who were planning on canceling their membership have since changed their minds. But the key to Netflix's stock could be answered in six months from now, the analyst said. Netflix isn't producing any new content right now due to the coronavirus which could pose a problem down the road.

Pachter recalled a sarcastic tweet he saw which simply stated: "I finished Netflix today." This won't be so funny for subscribers and investors, he said, if there is zero new content released six months from now. In fact, if Netflix has no compelling new content consumers would likely cancel their membership and move over to a competing service, he said. Pachter maintains a Sell rating on Netflix's stock.

Similarly, Pachter said Roku Inc (NASDAQ:ROKU) is "huge trouble" because it will have trouble monetizing its ad inventory. This should be no different than other forms of advertising that will be impacted by expectations for a large decline in GDP.

Watch to the full interview with Pachter in the clip below, or listen to the podcast here