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Key Words: Netflix is burning money and lacks a good business model, this tech investor says

Netflix Inc. reported a good quarter Tuesday, but tech investor Gene Munster wasn’t particularly impressed. Read More...

Netflix Inc. reported a good quarter Tuesday, but tech investor Gene Munster wasn’t particularly impressed.

“It is not a good business model.”

Gene Munster

The managing partner and co-founder of Loup Ventures, and former Piper Jaffray analyst, told CNBC ‘s “Fast Money” on Tuesday that he doesn’t see how the streaming giant is going to make money anytime soon.

In its earnings report, Netflix NFLX, +3.04%   said it added a record 9.6 million subscribers in the first quarter and posted a healthy increase in revenue, to $4.5 billion from $3.7 billion in the year-ago quarter. But it warned that its spending will increase, and said it expects around a $3.5 billion free-cash-flow deficit for the year.

That raised a red flag for Munster.

“At $10 a month they would have to add 30 million [subscribers],” he told CNBC. “At the current run rate, that probably puts it toward the end of 2020 before they kind of alleviate that cash burn. Now, they can do some things in terms of making some of the content costs a little bit more efficient. But I think that in general, more competition is not good for that.”

That competition will come later this year, when Apple Inc. AAPL, +0.01%  , Walt Disney Co. DIS, -1.62%   and AT&T’s T, +0.72%   WarnerMedia launch their own streaming services — potentially luring viewers away from Netflix.

Read: How the Disney-Netflix streaming war will create collateral damage

Munster told CNBC that he believes Netflix will do just fine with the competition — “they’re going to have great market share in the U.S. and globally” — but said its stock is overvalued, and investors can do better by putting their money elsewhere. “I think there’s just a lot better places to play in tech,” he said.

Not everyone feels that way. Earlier Tuesday, Deutsche Bank analyst Bryan Kraft upgraded Netflix to buy from hold, saying the company’s long-term trend looks good — even with fresh competition.

After rising 3% in regular trading, Netflix shares dipped slightly after hours, following the release of the earnings report. Its stock is up 34% year to date, compared to the S&P 500’s SPX, +0.05%   16% gain this year.

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