Netflix, Inc. (NASDAQ:NFLX) Faces a Potentially Make-or-Break Quarter

Netflix, Inc. (NASDAQ:NFLX) Faces a Potentially Make-or-Break Quarter

Netflix, Inc. (NASDAQ:NFLX) Faces a Potentially Make-or-Break Quarter

One of the biggest questions on the minds of Netflix (NASDAQ: NFLX) investors is whether the company can maintain its growth trajectory now that Disney (NYSE: DIS) has so successfully launched its rival streaming service. The House of Mouse announced on the day after its debut that Disney+ had signed up 10 million viewers by the end of its first day of operations. While there’s been no official follow-up, some projections placed its subscriber number closer to 25 million to close out 2019.

Shareholders will be keen to see if Disney’s success has come at the expense of Netflix when the streaming pioneer reports the results of its 2019 fourth quarter after the market close on Jan. 21. Let’s look at what we know so far, and why this quarter will be particularly important for Netflix’s future.

Are they or aren’t they?

Investors have been getting mixed messages about whether the rapid rise of Disney+ is costing rival streamers — particularly Netflix — viewers’ time and money.

A report released on Dec. 11 by market intelligence company Apptopia said that while the Disney+ app had been downloaded 22 million times in the first four weeks since its launch, “competitors remain largely unaffected in terms of their performance,” adding that rival app downloads and user sessions were “uninterrupted from their trend lines.” Focusing specifically on Netflix, the report showed that while there was a brief dip in mobile app sessions, they quickly recovered, remaining historically consistent. 

A study by Bank of America analyst Nat Schindler seemed to confirm those findings. The survey of more than 1,000 U.S. consumers found that 65% of early Disney+ subscribers don’t consider the service as a substitute for Netflix, and only 6.5% of users that subscribe to both said they planned to drop Netflix.  In a subsequent survey, that number fell to about 5%, which is consistent with normal churn. 

Not everyone is so sure. A survey of more than 200 streaming video subscribers conducted on Dec. 29 by Rosenblatt Securities analyst Bernie McTernan found that 59% were Disney+ subscribers, and among those, 29% said they had unsubscribed from a competing streaming service, with 9% specifically identifying Netflix as the service they dropped. 

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 311.57.

The projected upper bound is: 341.62.

The projected lower bound is: 312.55.

The projected closing price is: 327.08.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.

An inverted hammer occurred. If this occurs during a downtrend it implies a reversal. Look for a confirmation of the reversal on the bar.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

A shooting star occurred (a shooting star has a small real body near the bottom of the candle and a long upper shadow). During an uptrend(which appears to be the case with NETFLIX INC) the long upper shadow indicates that the bears are gaining control and a top may occur.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 36.8261. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 58.62. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 7 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 24. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.

Rex Takasugi – TD Profile

NETFLIX INC closed down -3.910 at 325.900. Volume was 50% below average (consolidating)(neutral) and Bollinger Bands were 57% wider than normal.

Open     High      Low     Close     Volume___
326.780 329.860 325.530 325.900 3,795,466
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 329.97 304.13 324.57
Volatility: 30 31 39
Volume: 5,235,095 5,777,497 7,221,724

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

NETFLIX INC is currently 0.4% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of NFLX.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on NFLX.O and have had this outlook for the last 56 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

You must be logged in to post comments :  
CONNECT WITH