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Evercore ISI’s Mark Mahaney says Netflix stock may have overheated heading into second quarter earnings. Mahaney expects the dominant streaming platform to underperform heading into second quarter earnings on July 19, and downgraded the stock in the short-term. Shares of Netflix have climbed roughly 48% since since the start of the year. NFLX YTD mountain Netflix stock has climbed more than 46% from the start of the year. Mahaney says that while Wall Street expectations for revenue, net subscription growth and earnings per share aren’t unreasonable, risks might be inflated due to higher buyside expectations. “Buyside expectations, however, are almost certainly higher than Street, with the market likely looking for more like 4MM-5MM Subs in Q2 and a similar to modestly higher level in Q3, which creates expectations risk,” the analyst said. Mahaney added that he expects Netflix to match Wall Street estimates of $8.24 billion in revenue, although Evercore expects a slightly lower net addition to global paid subscribers for the quarter at 1.7 million. Wall Street estimates, he added, are 1.8 million. “For Q2, we are looking for 3.4% Y/Y growth in Revenue to $8.24B, in-line with guidance vs. the Street at 3.6% Y/Y, in-line with Q1 growth on a 1-pt easier comp,” he said. Still, Mahaney is bullish on Netflix over the long-term, and said he expects $20 per share in adjusted earnings per share in 2025 as well as a 25 times price-to-earnings multiple, eventually carrying the stock to $500 per share in 2024. “We would acknowledge that shares of NFLX have exceeded our $400 PT (and we removed it from our Top Picks list last month), but we are sticking with Outperform rating on NFLX as we believe this stock still has legs,” he said. — CNBC’S Michael Bloom contributed reporting.
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