Ritholtz Wealth Management CEO Josh Brown cut Netflix Inc (NASDAQ: NASDAQ:NFLX) from his portfolio on Thursday following Walt Disney Co's (NYSE: NYSE:DIS) earnings results, but said the move isn't in response to Disney's report.
"I don't think that they compete with each other as much as maybe a lot of people think," Brown said Thursday on CNBC's "Fast Money Halftime Report
What To Know: Disney added 14.4 million Disney+ subscribers in the third quarter, bringing total Disney+ subscribers up to 152.1 million.
The Mouse now has more than 221 million total subscribers across all of its streaming services, which puts it ahead of Netflix, which ended its most recent quarter with 220.67 million subscribers after losing close to 1 million subscribers.
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Brown told CNBC that Disney passing Netflix in subscribers was ultimately expected and doesn't necessarily point to weakness at Netflix. Instead, it moreso validates the direct-to-consumer streaming services as technology that is here to stay, he said.
Still, he pulled the plug on Netflix stock. Brown picked up shares of the streaming company in June with the stock trading below $180 per share, as he said he viewed inflation as less of a threat to Netflix than other companies. With shares up 40% over the last month, he decided to take profits.
"The 'buy the dip' works. I'm fully out of it now. I may get back into it at some point. I think that they had priced this stock for catastrophe and it's not a catastrophe at Netflix, it's just a challenging period," Brown said.
Why It Matters: Although he acknowledged that he would consider buying it again, Brown doesn't see the "challenging period" letting up anytime soon. Instead, he expects increased competition from Apple Inc (NASDAQ: NASDAQ:AAPL) and Amazon.com Inc (NASDAQ: NASDAQ:AMZN) in the coming quarters.
"Right now is a tough period. They all have to invest a lot of money. You're gonna see Apple and Amazon start writing insane checks to Major League Baseball, to the NFL, just insane money," Brown said.
"Netflix doesn't really have the ability to compete at a certain level so they're gonna have to fight it out ... it's going to be very costly and I think it's going to be a tougher investment story going forward."
NFLX Price Action: Netflix has traded between $609.99 and $162.71 over a 52-week period.
The stock was up down 0.25% at $243.51 Thursday afternoon, according to Benzinga Pro.
Photo: mohamed Hassan from Pixabay.
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