Netflix, Inc. (NASDAQ:NFLX) stock battered as investors await a flood of new competitors
The competitive landscape has weighed heavily on the minds of Netflix Inc. investors.
In slashing his price target on Netflix NFLX, +0.61% shares to $300 from $380, Evercore ISI analyst Vijay Jayant on Monday said investors are jittery about Netflix’s business model with “a number of new Internet TV service launches from well-capitalized competitors over the coming months.”
The gauntlet is daunting: Walt Disney Co. DIS, +0.48% , Apple Inc. AAPL, +0.02% , AT&T Inc.’s T, +0.40% HBO Max, Comcast Corp.’s CMCSA, -0.27% NBCUniversal, Amazon.com Inc. AMZN, -0.40% , and Roku Inc. ROKU, -0.49% .
The first hint of what this means for Netflix and its investors could come Oct. 16, when Netflix reports its third-quarter earnings.
The first great success story of the genre has lately been a cautionary tale about the fickle nature of consumers’ viewing habits and the cyclical nature of hit shows. Netflix shares have dived 24% since July 17, when it disclosed disappointing figures about the number of people signing up for the service. Netflix added 2.8 million net new international subscribers but lost 126,000 U.S. customers in the quarter that ended in June. Wall Street, conversely, expected 352,000 additional domestic customers and 4.8 million new viewers overseas.
Netflix has forecast up to 750,000 paid subscriber additions in the third quarter, with results scheduled to be released on Oct. 16. Netflix is the market leader, with some 60 million domestic and 91.5 million international subscribers.
For the immediate future, Netflix’s dominance appears safe. By 2021, however, things could get dicey, says Needham analyst Laura Martin. She expects a price war worldwide then that will force Netflix to lower subscription fees of $9 to $16 a month. The company risks losing 5 million to 10 million of its 60 million U.S. subscribers in 2020 if it doesn’t act soon, she warned in an Oct. 3 note.
Netflix shares have gained 2.3% year to date, while the Nasdaq Composite Index COMP, -0.33% has climbed 20% and the S&P 500 index SPX, -0.45% has rallied 18%.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 304.35.
The projected upper bound is: 290.27.
The projected lower bound is: 256.20.
The projected closing price is: 273.23.
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 23 white candles and 27 black candles for a net of 4 black 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 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 83.1918. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 2 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 44.65. 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 8 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 41. This is not a topping or bottoming area. The last signal was a buy 7 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 2 period(s) ago.
Rex Takasugi – TD Profile
NETFLIX INC closed up 1.670 at 274.460. Volume was 9% below average (neutral) and Bollinger Bands were 8% wider than normal.
Open High Low Close Volume___
271.990 276.680 271.280 274.460 6,796,811
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 266.64 292.85 335.14
Volatility: 39 37 45
Volume: 9,254,499 7,482,549 8,263,608
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 18.1% below its 200-period moving average and is in an downward 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 bearish on NFLX.O and have had this outlook for the last 14 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.
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