After being the darling of Wall Street last year, Netflix hasn’t had a pleasant 2016 in the stock market, which has brutalized it to the tune of a 22% year-to-date fall.
Hedge funds in particular have made big bets against the video-streaming company,according to a new report by Goldman Sachs. The report tracked the 2016 first-quarter activity of 841 hedge funds and showed them to have large short positions on Netflix.
The report pegs the value of short interest at $3.4 billion as of April 29, representing 9% of float, or the number of shares readily available for trading.
Historically, this type of percentage is not unusual for Netflix, given that it is one of the most volatile stocks on the S&P 500.
Wall Street confidence in Netflix was shaken by the company’slatest quarterly report on April 18, which showed strong results for the first three months but put out a Q2 estimate for international subscriber growth that was well below Wall Street targets.
After Netflix’s 130-country launch in January, which put it in every major market except China, international subscriber growth has been the key metric on Wall Street’s mind. The company beat Wall Street expectations for Q1, adding4.51 million subscribers internationally versus Wall Street estimates for 4.49 million.
But a source of concern has been thesmall library of contentthat Netflix has in certain newly launched countries. And last month,UBS estimatedthat Netflix was seeing mixed results in its new markets, with some, such as India and South Africa, doing well and others, such as Russia and Turkey, lagging.
Netflix’s company narrative had focused on its compelling original content as a strength internationally, since the licensing is much simpler. The company will release600 hours of original content this year, including 31 original shows. In its quarterly letter to shareholders, Netflix blamed some of the shortfall in its anticipated international subscriber growth on issues related to last year’s anomalous Australia/New Zealand launch.
Additional reporting by Bob Bryan.