Mish’s Daily: All About Netflix

As investors are looking at the earnings and guidance closely for the individual leading companies reporting, I thought I would highlight the leader in the multi-billion-dollar TV streaming industry.

First off, Netflix (NFLX) reported:

Revenue: $7.97 billion, est: $8.04 billionEPS: $3.2, est: $2.91

The stock’s initial move was up post-earnings, based on the better-than-expected EPS.

This is on the heels of its first quarterly subscriber drop in over a decade in April. This drop had investors worried heading into the company’s second-quarter earnings report. Netflix is down 67% year-to-date and, although they expected to lose 2 million more subscribers this quarter, they only lost 970k.

To date, it has not been all doom-and-gloom for Netflix. Over the last month, the stock is up 13%. The company is still the leading global video streaming service and it continues to invest heavily in new content. Stranger Things, season 4 appears to have not disappointed fans.

What might Netflix do from here?

Netflix (NFLX) is one of the most popular companies on Wall Street. Some experts are concerned that Netflix’s fast rise may be coming to a stop. The company remains optimistic about growth, noting hundreds of millions of internet homes worldwide that have yet to subscribe.

Even though Netflix lost less subscribers than anticipated, competition from high-level rivals and consumers will force them to cut their discretionary spending amid record high inflation. However, Netflix’s losses could be reversed by a new revenue stream and a crackdown on password sharing.

Netflix is rolling out a new lower-free subscription membership option. The company announced that Microsoft would be its sales partner in rolling out this service. With global prices rising at their fastest pace in four decades, a lower fee model might be the answer Wall Street is seeking.

The chart shows strong support at 185, which is the risk area. Over 200 could see a very quick run to 240-250. Any strong catalyst post earnings could also bring the price to fill the gap from April or around 330. The question is whether it is a wise investment.

For my subscribers, they know the answer, since I alert them daily to any new trades.

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ETF Summary

S&P 500 (SPY): Crossed the 50-DMA; now must confirm volume low.Russell 2000 (IWM): Like SPY crossed the 50-DMA and has to confirm.Dow (DIA): 315 along with the 50-DMA now pivotal.Nasdaq (QQQ): Also crossed the 50-DMA. Netflix should help keep it above.KRE (Regional Banks): Finally took out 60.00. Now support.SMH (Semiconductors): The whole Modern Family has enjoyed the move above the 50-DMA. And they all must confirm.IYT (Transportation): 220 support along with the 50-DMA.IBB (Biotechnology): 129.50 resistance.XRT (Retail): Like IWM, Granny crossed the 50-DMA threshold.

Mish Schneider

Director of Trading Research and Education