Netflix Need More Than A Stellar Earnings To Push Stock Price Higher

With Netflix rolling out cheaper ad-supported plan, this could show in Netflix’s results as this new plan should boost its earnings. As the plan start from a much lower base, meaning there's more room to run. Another area to look at for this earnings, would be the effect and result from Password sharing crackdowns, there should be some significant increase in subscriber from this exercise.

Netflix is expected to report Q1 earnings of $4.20 per share, up 45.8% year-over-year (YoY) on revenue of $8.6 billion (+5.8% YoY).

I would be more interested on how Netflix would be trading in the midst of a declining market sentiment, and whether investors would be back to back streaming stocks.

If we look at the past few days of trading, Netflix stock price has been declining to trade at range bound, and the MACD does not suggest that there is a potential reversal to bullish upside.

With a selling strength building up, investors sentiment does not seem to match what market perceive its earnings result to beat expectations.

NFLX last reported earnings on 23 Jan 2024 after the market close (AMC). NFLX shares gained +10.7% the day following the earnings announcement to close at 544.87. Following its earnings release, 85 days ago, NFLX stock has drifted +12.6% higher.

From the time it announced earnings, NFLX traded in a range between 548.46 and 639.00. The last price (613.69) is closer to the higher end of range.

Estimated implied straddle for upcoming earnings is 8.6%. On the back of benefits from its Password sharing crackdowns and also the cheaper plan, Netflix earnings should have gain some better-than-expected revenue, and we might see price effect coming at more than 10% on the positive gains.

As we can see from the past few days trading, though it has shown a pretty consistent upwards trend, but Netflix begin to pull back below the 20-day Moving Average period.

This might not sound good especially prior to its earnings, but we need to monitor and trade cautiously as market is also experiencing volatility.

Even though analyst have been quite positive for Netflix upcoming earnings, this might be a case of better-than-expected earnings reported but yet stock price could still be in the negative, because of the pullback.

Netflix would need to show that it could possibly trade above the 20-day Moving Average period today (18 Apr) before its earnings release after market close. This should give traders and investors confidence of a more positive price effect.

Appreciate if you could share your thoughts in the comment section whether you think Netflix would be able to exit the pullback and get into a bullish reversal before its earnings release after market (18 April)?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.