Netflix, Inc. (NASDAQ:NFLX) Is Up To Bat This Q4 Earnings Season

Netflix, Inc. (NASDAQ:NFLX) Is Up To Bat This Q4 Earnings Season

Netflix, Inc. (NASDAQ:NFLX) Is Up To Bat This Q4 Earnings Season

Tech is up to bat in Q4 earnings season, and the streaming king is releasing its results after the bell Tuesday, January 21st. Despite Netflix’s NFLX massive decade of returns, it appears that the shares have leveled out. Over the last 52-weeks, this stock has traded sideways as new competition in the space, and a decelerating customer base has begun to instill concern in investors.

Tomorrow’s earnings are likely to move this stock with the last 8 quarter releases having an average price action of 6.8% (5 up, 4 down). For this December quarter, Zacks Consensus estimates show an EPS of $0.51 on sales of $5.44 billion, which would represent year-over-year growth of 70% and 30%, respectively.

Investors’ primary focus will be on the number of added subscribers both domestically and internationally when dissecting the earnings report tomorrow. These figures tend to move the stock more directly than EPS and revenue estimates.

Additional domestic subscriptions are expected to slow down significantly, with analysts estimating only 589,000 new subscribers. A plateau has already begun with domestic subscription decline in June quarter results and a big subscriber miss in Q3. North American subscriber growth is no longer the investors’ biggest concern.

International subscriptions are now the primary driver of the business’s future growth. Subscriber expansion is estimated to be substantial, with 7.04 million new subscribers expected abroad. Their international business is a segment that they cannot afford to curtail, considering that this is anticipated to be the most significant top-line driver moving forward. If this international estimate is missed, expect to see an NFLX share price decline.

Competition in Streaming

Competition in the subscription video streaming space has picked up with new top-tier tech players exploring the segment. Apple AAPL and Disney DIS both released streaming services of their own this past fall. Disney+ was able to gain 10 million subscribers its first day of availability and is expected to have over 100 million by 2025.

Comcast CMCSA and AT&T T are releasing streaming platforms of their own this spring, which will further shake up the streaming industry.

More and more Americans are cutting the cable cord and turning to streaming services. There is room in the sea of streaming services, but these new competitors are likely going to slow Netflix’s growth.

It is now up to Netflix to make sure its service is a necessity in households’ library of platforms. Its latest critically acclaimed hit, The Irishman, which is now up for 10 Oscar nomination including best picture, illustrates that Netflix means business in war between streaming services.

Take Away

When analyzing the Netflix earnings glance at EPS and revenue figures but keep your focus on subscriptions added in Q4 because that is going to be the real NFLX mover. Remember, if you miss the initial move, it doesn’t mean you have completely missed out on a buying/selling opportunity. NFLX tends to keep its momentum after positive/negative earnings.

Look for changes in management guidance as well as management sentiment and tone for clues on how they see business moving forward.

Technical Indicators

Overall, the bias in prices is: Upwards.

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

The projected upper bound is: 355.92.

The projected lower bound is: 325.49.

The projected closing price is: 340.70.

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 26 white candles and 23 black candles for a net of 3 white candles.

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 62.5075. This is not an overbought or oversold reading. The last signal was a sell 6 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 61.76. 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 17 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 77. This is not a topping or bottoming area. The last signal was a sell 1 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 11 period(s) ago.

Rex Takasugi – TD Profile

NETFLIX INC closed up 1.050 at 339.670. Volume was 19% below average (neutral) and Bollinger Bands were 46% narrower than normal.

Open     High      Low     Close     Volume___
341.000 341.570 337.380 339.670 6,066,547
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 336.55 314.85 323.23
Volatility: 33 31 39
Volume: 5,669,642 5,769,898 7,166,026

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 5.1% above its 200-period moving average and is in an upward trend. Volatility is low 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 66 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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