Josh Brown dramatically cuts Netflix stock holdings after proposed Warner Bros. buy. Here’s why
Josh Brown, a long-term Netflix bull , said on CNBC Friday afternoon that he had cut his position in the streaming platform by 85% following its $72 billion deal to buy pieces of Warner Bros. Discovery. In the deal, announced on Friday, Netflix will acquire Warner Bros.’ film studio and streaming service at $27.75 per WBD share. While Brown said that he still likes the stock, the year or so it could take for this deal to settle represents a big opportunity cost in terms of other lost investments. “I can’t sit for a year and watch this become a political football and tie up capital,” the CEO of Ritholtz Wealth Management said on CNBC’s ” Halftime Report ” Friday afternoon. “It’s just a portfolio management decision. I think there are going to be other opportunities that have more near-term upside while this Netflix thing works its way through the meat grinder in Washington.” Brown pointed to regulatory and antitrust scrutiny as a headwind for the acquisition, which he said is the largest M & A transaction in the post-pandemic world. “You cannot tell me the ‘Eye of Sauron’ is not going to see this thing happening and say, what does this mean for us?” he added. While Netflix “still represents a tremendous value,” their growth and capital expenditures could face a near-term slowdown as the company’s capital gets tied up into this potential deal. Brown said that he would spend the next 12 to 18 months keeping a close eye on the stock before deciding to take further action. “I think Netflix is a great value. I think it’s a great deal. I actually love the deal for them — not only for them, but I love that they’re keeping this out of the hands of somebody else — equally important in the streaming wars,” he added. “But I can’t sit here, so I kept a very small position on and we’ll see what happens.” Shares of Netflix were last trading 4% lower on Friday, while Warner Bros. Discovery stock added almost 5%. DISCLOSURES: All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC” TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
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