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Netflix Stock Dips

14 Dec, 2006 By: Jessica Wolf

Netflix stock dipped Thursday after Bank of America launched coverage of the online DVD rental company with a “sell” rating.

The company's stock price fell $0.70 (2.5%) to $27.70 after Bank of America analyst Brian Pitz sent a note to investors calling attention to the company's operating expenses and a potential underinvestment in new technology spending with the launch of a digital downloading service nigh.

According to reports, Pitz told investors that Netflix's projected $40 million in research and development spending for 2007 may “prove insufficient,” noting the increasing amount of competition in the burgeoning digital delivery space from other well-established players such as Amazon.com.

Given increasing subscriber acquisition costs, Pitz also told investors he is skeptical whether Netflix will be able to hit the company target of 20 million subscribers by 2012.

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