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Analyst: 'There May Be No Bottom' to Netflix's 2012 losses

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Jin Lee/Bloomberg/Getty Images

Wedbush's Michael Pachter downgrades the company's stock from "neutral" to "underperform."

NEW YORK - Wedbush Securities analyst Michael Pachter on Wednesday cut his rating on Netflix's stock from "neutral" to "underperform," saying that "there may be no bottom to the company's 2012 losses."

The Wall Street observer maintained his 12-month price target of $45 on the streaming video provider.

"In our view, the company's business model was broken when it raised prices for its hybrid customers, and continued customer defections will require it to invest ever-increasing amounts on marketing," Pachter said in a report. "We are particularly concerned by the company's growth at all costs business model."

Pachter earlier this month had a public spat of sorts with Netflix after it announced a debt and stock deal to raise money. Pachter argued that he company's need to raise money is "bad to the point of desperation."

A Netflix spokesman back then responded: "Netflix has no cash or general liquidity needs, and therefore we have no immediate plans to use this capital. We don't think we need it, but it's always nice to have more money than you need."

The company in that context also said it expects to report losses for 2012.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai