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Asset Watch

Will Netflix launch?

Tuesday, May 23, 2023

Despite the mixed quarter, Netflix said 25% of its new subscribers signed up for its ad-supported tier. Despite the streaming giant cracking down on password sharing, simple tweaks have increased the company’s growth outlook.
Wedbush analysts added the stock to the firm’s “Best Ideas” list and reiterated their outperform rating. They wrote on May 19:
“We think Netflix has reached the right formula with its global content to balance costs and generate increasing profitability, while its ad-supported tier and password sharing crackdown should further boost cash generation” and “generate significantly more free cash flow than its guidance suggests.”
Yet, as the stock nears key resistance, has the good news already been priced in?

Outside of 2019 and 2022, Netflix’s 100-week moving average has largely acted as support. And with the critical level now resistance, the stock retreated when it approached the milestone last week.

The 100-week MA is also near the September and October 2018 highs, the May and July 2019 highs, the February and March 2020 highs, and the January 2023 high. As a result, Netflix needs to overcome these technical hurdles to continue its ascent.

The January 2023 high potentially created a double top, so you should be mindful of a possible reversal. When the ominous pattern formed in August and December 2015, Netflix declined substantially before finding support at the 100-week MA.

Are the technicals too troublesome, or will Netflix remain in a bull market?


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