Asset Watch
Thursday, January 21, 2025
As we enter a new era with Donald Trump as the U.S. President, tariff talk and news headlines could bring forth a lot of daily volatility in 2025. However, with investors laser-focused on Netflix’s Q4 earnings on Jan. 21, Big Tech’s fundamentals could be under heavy scrutiny in the weeks ahead.
As a result, while the macro crowd will be working overtime to assess Trump’s agenda, the bottom-up bulls think Netflix could be a winner this week.
BMO Capital Markets analyst Brian Pitz upgraded Netflix on Jan. 14, raising his price target from $825 to $1,000.
He cited “Successful live events in the fourth quarter of 2024, WWE beginning in the first quarter of 2025, Women’s World Cup Soccer in 2027, and upside from yet-to-be-announced titles.”
He also increased his year-end 2025 ad-supported subscribers (the lowest cost plan) estimate from 60 million to 90 million, and $3 billion of global advertising dollars by the end of 2025 should provide “meaningful contributions in 2026 and beyond.”
Consequently, the Jan. 21 earnings release could be a catalyst that ends Netflix’s recent correction.
The 20-week moving average is a key trend indicator and Netflix bulls have been rewarded when the stock trades above it. If you analyse the movement of the blue line, you can see that despite some choppy periods, being long above the 20-week MA has been a profitable strategy.
Therefore, with the stock still above the blue line, the outlook is constructive as long as Netflix stays above $806.
The 2022 crash highlights how investors can overreact to short-term headwinds. When Netflix reported two consecutive weak quarters, the stock sunk from $700 to below $200. But, even a terrible print on Jan. 21 likely only results in a retest of the $700 breakout, which is common, and could be a healthy long-term development.
All in all, a repeat of 2022 is highly unlikely, and ratings from Netflix’s recent events support resilient consumer demand.
Cautious traders should wait until after the release to make their play, as technical breakdowns are present on shorter-term charts. In contrast, the medium-term uptrend remains healthy, and sold earnings reports from the largest U.S. banks point to a resilient economic backdrop where Netflix should prosper.