Netflix stock - NFLX - is over priced in an economy that will contract

While Netflix has done a great job of bringing in more subscribers, the stock has exceeded rational valuation metrics - in an economy that will contract

Netflix Stock - NFLX - 4-Hour Chart

The most recent financial release for Netflix showed better-than-expected results. Initially, NFLX stock shot upward but then dropped a solid 11%. Then, the stock rallied back upward. Breaking down both the economy and Netflix stock show that with interest rates remaining higher for longer, the economy will be forced to grow at a slower pace. In the meantime, the stock market does not appear to be getting ready for the eventual slowing in the growth rate despite data continues to pouring in showing that there are rational concerns.

For me, analysis starts with the prospects of the economy, then moves to the respective stock. Netflix is significantly over priced given its earnings potential. Notwithstanding, Netflix is also over priced given less risky investments. And, with an economy that is likely to be restricted in its growth rate, the stock market - and Netflix - continue to push higher and higher. There will be a reckoning and for some time I have been calling for this to start in the fall.