Netflix, Inc. (NASDAQ:NFLX) faces growing fears that it could lose out in the streaming wars
Netflix faces growing fears that it could lose out in the streaming wars, but Goldman Sachs said in a note to clients on Thursday that the company has fought off competition before, making it likely to weather the storm. But Goldman cut its its 12-month target price from $420 to $360 anyway, citing long-term pressures to subscriber growth and margins. The stock, which currently trades at $280, closed up 4.8% on Thursday.
A bevy of new streaming services are set to launch from Disney, Apple, AT&T and others, but Netflix has faced many competitive challenges from traditional media companies and larger technology companies, Goldman analysts said. Among those include HBO, Starz, Amazon, Google’s YouTube, Viacom and Comcast’s Sky.
The analysts put together this chart, reprinted here with permission, to show that Netflix’s subscriber numbers kept going up and to the right even as competition stiffened:
Goldman Sachs analysts say Netflix’s long history of competition should help it weather the streaming wars.Goldman Sachs
“Netflix’s incremental net subscriber additions have grown continuously despite significant competitive pressure,” Goldman Sachs analyst Heath Terry said in a note to clients. “We continue to believe that the relative value (price divided by content consumed) of Netflix far exceeds any of the current or planned competitive offerings, making it unlikely that any of them will replace Netflix as consumers’ primary streaming choice.”
Goldman said Netflix’s fourth-quarter results are likely to exceed analysts’ expectations, driven by its strong content slate, a “more stable pricing environment” and incremental subscriber growth.
Netflix’s stock has suffered as the streaming wars accelerate, with the shares down 26% for the past three months.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 297.53.
The projected lower bound is: 261.73.
The projected closing price is: 279.63.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with NETFLIX INC), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 72.5859. This is not an overbought or oversold reading. The last signal was a sell 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 51.42. 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 buy 11 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 144.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 10 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 5 period(s) ago.
Rex Takasugi – TD Profile
NETFLIX INC closed up 12.950 at 280.480. Volume was 47% above average (neutral) and Bollinger Bands were 1% wider than normal.
Open High Low Close Volume___
265.970 280.530 265.034 280.480 10,961,191
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 270.24 289.59 335.53
Volatility: 32 40 44
Volume: 8,071,552 7,603,255 8,145,452
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.
NETFLIX INC is currently 16.4% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of NFLX.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on NFLX.O and have had this outlook for the last 17 periods.
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