Bryan Kraft upgraded Netflix to buy from hold. He works at Deutsche Bank. Netflix sold off in September. Kraft looked at that chart and thought "now is the time."
This is the analyst equivalent of showing up to a yard sale and announcing you'll pay full price. The stock went down. Kraft calls it an opportunity. He gets paid whether you make money or not.
Deutsche Bank has a research department that publishes ratings. Those ratings change when stocks move. When a stock drops, they upgrade it. When it rallies, they'll downgrade it eventually. They call this "timing the market." The rest of us call it "describing what already happened."
Retail traders will read this upgrade and feel validated. They bought Netflix at $680 because they watched Stranger Things twice. Now it's lower and a guy named Bryan says buy. They'll average down. They'll tell themselves Deutsche Bank confirmed their thesis. Their thesis was that they like television.
Kraft previously rated Netflix a hold. That meant don't buy it and don't sell it. Just stare at it. Now he says buy it because it costs less than it did three weeks ago. This is the same valuation methodology used by people who buy expired yogurt because it's half off.
The stock sold off in September. We're still in September. Kraft published his upgrade before the month ended. He looked at three weeks of price action and reversed his entire stance. That's not conviction. That's a weather vane with a Bloomberg terminal.
Netflix will either go up or down from here. If it goes up, Kraft will cite his upgrade. If it goes down, Deutsche Bank will publish a note explaining why the thesis needs more time to play out. Either way, Bryan keeps his job and you keep refreshing your portfolio balance at 3:47 p.m. wondering where it all went wrong.
Photo by Thibault Penin on Unsplash
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