Netflix, Inc. (NASDAQ:NFLX) stock is up more than 10,000% over the last decade
Netflix (NASDAQ:NFLX) investors have been giving the streamer another round of applause since the latest earnings report. Shares jumped up as much as 10% on the news, and the stock was trading up 4.3% at the time of writing.
It was an all-around solid report: Total subscriber growth easily beat estimates, with the company adding 7 million members against a forecast of just 5 million. Bottom-line performance was strong as well; operating margin improved from 7% to 12%. And earnings per share came in at $0.89, up from $0.29 a year ago, though it would have been around $0.79 with certain tax-related adjustments factored in.
Despite Netflix’s unbelievable performance over the years — the stock is up more than 10,000% over the last decade — the streamer has plenty of bears betting against it. Wedbush analyst Michael Pachter has long been bearish on Netflix, currently maintaining a price target of $125. In other words, he sees the stock losing nearly two-thirds of its value; he said in July that Netflix is “in a vicious spiral to the bottom on content spend.”
Netflix should eventually reach diminishing returns with its content spend, as there’s only so much programming that the platform can justifiably serve to add new members and maintain its current base. The strategy is clearly driving subscriber growth; the company sees record total additions of 9.4 million subscribers in the fourth quarter, or 7.6 million paid ones.
However, investors who are nervous about the company’s cash burn will have to be patient, considering the company expects to lose another $3 billion to $4 billion in cash next year. It’s planning another significant hike in content spending in 2019. That spending looks justified as the market is ripe, and Netflix wants to attract new subscribers before new competition enters the market. But with the stock price already looking elevated after nearly doubling this year, future gains will be more difficult while the company is still losing billions.
Eventually, investor attention will shift from subscriber growth to the company’s bottom line and free cash flow.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 353.98.
The projected upper bound is: 363.15.
The projected lower bound is: 301.52.
The projected closing price is: 332.34.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 19 white candles and 31 black candles for a net of 12 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 43.6858. This is not an overbought or oversold reading. The last signal was a buy 5 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 42.50. 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 43 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 -50. This is not a topping or bottoming area. The last signal was a buy 5 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 sell 11 period(s) ago.
Rex Takasugi – TD Profile
NETFLIX INC closed down -14.040 at 332.670. Volume was 40% above average (neutral) and Bollinger Bands were 21% wider than normal.
Open High Low Close Volume___
351.000 355.800 332.200 332.670 16,717,233
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 341.50 353.88 329.71
Volatility: 85 56 51
Volume: 16,842,710 10,953,051 11,061,372
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 0.9% above 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 8 periods.