Legendary investor Leon Cooperman revealed in a Wednesday interview with CNBC that the online streaming giant Netflix, Inc. is likely to be acquired by “somebody.” Cooperman, who is CEO of Omega Advisors, thinks that Netflix “is going to work, but somebody buys the company at a nice premium,” Fortune reported. The billionaire investor also disclosed that he dumped his take in the online streaming company, which reported weak second quarter earnings.
Who Will Buy Netflix?
“I think ultimately Netflix is going to work, but I think somebody buys the company at a nice premium,” Cooperman said. “Netflix is an acquisition candidate for somebody.”
According to rumors, big players including Disney and Apple are potential buyers of the video streaming company.
The billionaire investor doesn’t seem to think a takeover at a “nice premium” will be announced in the near term. The investor had unloaded his $34.1 million stake in Netflix, which was bought between April 1 and June 30 this year. The latest 13 F filing shows that Cooperman was holding 372,500 Netflix shares as of June 30.
Talking about the share sale, Cooperman said: “Another idea came in, I didn’t want to raise my exposure so I sold, and went to something else.”
How Is Netflix Performing?
Netflix, Inc. has a market cap of $41.84 billion. The company stock has plunged by 16.5% year-to-date and 17.16% during the past 12 months. Shares price has fell by around 5% during the three months.
During the second quarter, the streaming company saw a massive decline in subscriber growth, resulting in ratings downgrades from several analysts. NFLX is an expensive stock, and investors appear to be worried about the pace of the company’s growth. They fear that the current growth rate isn’t enough to support the company’s high stock price and the $6 billion it will spend on content this year, according to Investo Pedia
There has been significant insider buying at the streaming company during the past three months, in which some 900,000 shares were bought by insiders. CEO Reed Hastings recently sold 102,340 shares of the company’s stock at $95.21 per share. Hastings still owns 102,340 shares in the company.
For the third quarter, the company expects to add just 400,000 new paid subscribers in the United States and 2.1 million internationally. A new report suggests that a majority of the company’s subscribers will be international in the next two years. Its global subscriber base will actually outpace U.S. subscribers by the year 2018. IHS Markit reported that the streaming service’s total user count will be dominated by international users.
By 2020, Netflix will have roughly 75 million international users. In that same year, its global revenues will exceed $13 billion, with more than half (53%) of that coming from international markets. The U.S. streaming market will generate $6.2 billion in revenues.
The streaming company is now evaluating different ways to enter into China, the second-largest economy in the world and home to nearly 1.4 billion consumers and more than 360 million broadband subscribers. Currently, the company is streaming videos in Taiwan, Hong Kong, and Macau – all three of these territories operate under the wing of the Chinese government. In order to open up the Chinese market, Netflix, Inc. will need to find a local partner that already runs a media service.