Netflix Driving Into A 'Dead End,' Munster Says

Netflix Inc NFLX is driving into a “dead end,” Loup Ventures co-founder Gene Munster said on Tuesday.

What Happened: In a CNBC "Fast Money" interview, the tech investor questioned whether the company’s stock can continue on the path of appreciation, adding that Netflix needed to evolve its business in order to keep delivering solid returns.

Munster commented that “it’s been great” for the streaming video on demand company over the past decade.

The company has reached a valuation of $250 billion, "much bigger than I ever thought it would be," Munster told CNBC, but cast doubts that the “same playbook" can "yield the same results, that same price appreciation” going forward.

Munster contends that Netflix — even though a pioneer in the streaming space — faces a different challenge than its peers like Amazon.com, Inc’s AMZN Prime Video and Walt Disney Co’s DIS Disney+. “Essentially they’re driving into what is a dead end here.” he said while admitting consumers derive a “lot of value” for their subscription.

“I’m thinking about the stock and making money in the stock market,” Munster said. “Ultimately, to do that, you have to evolve the business.”

Why It Matters: Netflix declared third-quarter results on Tuesday, with earnings at $1.74 per share and revenue of $6.44 billion, missing analyst expectations of $2.13 per share.

Net paid subscriber growth was at 2.2 million versus 6.8 million net additions in the same period last year.

Munster last month said that the so-called FAANG stocks were due for a "fracturing," and classified Facebook Inc FB and Netflix as the "have nots" in the post-pandemic era.

Price Action: Netflix shares traded nearly 5.7% lower at $495.40 in the after-hours session on Tuesday after closing 1% lower.

See Also: Netflix Plans To Trial Free Weekend Access To Lure More International Subscribers

Photo by Marit & Toomas Hinnosaar on Flickr