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Trends & Analysis
News
Is Amazon a best-buy for the holidays?
News
China stocks end mixed despite PBoC announcement
News
Asia stocks rise on prospects of Fed easing hikes
News
HP joins the tech layoff spree
News
Will the euro give the bulls 200 reasons to smile?
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Best Buy shares spike amid upbeat Q3 print

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Asset Watch

Is Netflix a must-see stock?

 

Tuesday, October 25 2022

After Netflix added 2.41 million net subscribers in Q3 versus management’s expectation of one million, the streaming giant was back in investors’ good graces. Netflix’s letter to shareholders stated that despite “a challenging first half, we believe we’re on a path to reaccelerate growth” and that “we estimate [our competitors] are all losing money, with combined 2022 operating losses well over $10 billion, vs. Netflix’s $5 to $6 billion annual operating profit.”
With the fundamentals trending in a positive direction, will the technicals remain as resilient?
On Oct. 21, Netflix closed above its 200-day moving average for the first time since January. Stocks also soared above its 50-day MA, and the key level acted as resistance until it became support in July. Therefore, momentum is in place for the first time in a long time.

Netflix sunk by more than 30% after reporting poor first-quarter earnings on Apr. 19. However, the after-hours sell-off created a large gap that has yet to be filled. So, if Netflix maintains its bullish momentum, next-level resistance of $329 is near the March and pre-gap intraday lows, and a realisation implies a nearly 14% upside.

 

On the other hand, a concern for Netflix is its daily RSI near 70 signals overbought conditions. While the uptrend can continue, a cooling-off period may be needed.

 

Is it wise to wait for a pullback to the 200-day MA ($278.21) or will Netflix fill the gap near $329 without any interruptions?


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