Netflix shares tumble as Needham sees 'rising growth risks'
Netflix (NASDAQ: NFLX) stocks briefly fell as much as 3.5 percent on Tuesday after Needham analysts downgraded the streaming company's stock to "hold" from "buy" due to "rising growth risks."
The Brexit vote might cause a U.K. and EU GDP slump, putting Netflix markets at risk for the next 12-to-24 months, the firm said. The United Kingdom is Netflix's second biggest market after the U.S.
This might cause slowing subscriber rates and an accelerating churn rate, or amount of users who cancel subscriptions at any time, the firm added.
"In May, the EU proposed legal changes that would force NFLX to fund European-made films, implying higher costs and lower ROICs (return on invested capital) as local content often does not travel well globally. If NFLX chooses to exit certain EU markets to avoid these requirements, this would slow international subscriber growth," Needham analyst Laura Martin wrote in a Tuesday note to clients.
Martin said she believes that Netflix's stock prices are priced to perfection, or will weaken with any incoming bad news.
Netflix later reversed and closed up 1 percent on Tuesday after Comcast announced it would make the streaming service available on its X1 platform . It has tumbled 14 percent so far this year.
NFLX year to date:
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