Netflix, Inc. (NASDAQ:NFLX) Looking to Reduce Cash Burn Rate

Netflix, Inc. (NASDAQ:NFLX) Looking to Reduce Cash Burn Rate

Netflix, Inc. (NASDAQ:NFLX) Looking to Reduce Cash Burn Rate

The establishment of local production hubs not only lowers cost of production but also provides opportunities for tax credits in the long haul.

For instance, the company is likely to receive $4 million in tax credits over 10 years in New York, if it can fulfil its promise of creating 127 office jobs and retaining the existing 32 positions at its New York City production hub, per engadget.

Cash burn has been a major headwind for Netflix amid intensifying competition in the streaming space from new entrants like Disney+, Apple TV+, AT&T’s T WarnerMedia and Comcast’s CMCSA NBCU.

Reportedly, the company is planning to put a brake on original content spending, particularly for big-budget projects, which lack viewership. This strategy will help reduce cash burn rate.

Notably, Netflix expects 2019 free cash outflow to be modestly higher at roughly $3.5 billion due to higher cash taxes related to change in its corporate structure, and additional investments in real estate and other infrastructure.

However, the company expects free cash flow to improve in 2020 and each year after that, driven by growing user base, revenues and operating margins.

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 355.87.

The projected upper bound is: 400.89.

The projected lower bound is: 362.54.

The projected closing price is: 381.72.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 27 white candles and 23 black candles for a net of 4 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 93.1827. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 64.43. 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 114 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 133.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. 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 buy 11 period(s) ago.

Rex Takasugi – TD Profile

NETFLIX INC closed up 6.290 at 381.720. Volume was 41% below average (neutral) and Bollinger Bands were 40% wider than normal.

Open High Low Close Volume___
376.690 381.990 375.840 381.720 3,799,009

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period     50-period     200-period
Close: 369.70 360.63 337.72
Volatility: 27 34 53
Volume: 4,875,889 5,497,819 9,804,886

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 13.0% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 9 periods.

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