Netflix Reports – Shares Fall (Morning Insights Preview)

The “N” in FANG, Netflix, the online streaming leader, reported fewer new subscribers than the street anticipated. Their guidance for next quarter was not good either, forecasting just 1 million new subscribers. Put that in perspective last year in this quarter, they reported over 15 million new subscribers. The previous quarter they reported over 8 million new subscribers, so the 4 million this quarter and a lower outlook sent the shares falling under $500 to as low as $480. I’m reading that the 1 million new subs forecasted could be their worst quarter in the company history if they were to come in below that number. In 2013 they had one quarter where they just eclipsed 1 million. So this is the other side of the pandemic, less people at home could spell a change in some trends. And, as I noted last week, guidance can be more important than anything else in these earnings reports. Analysts were looking for over 6 million this quarter and over 4 in the next report so that is one area that they will have some explaining to do. 

Below is the chart for NFLX. It had a Neutral Power Gauge, it was overbought and the relative strength was predominantly on the bearish side since October of last year, but the stock was resilient. It happens to be in over 200 ETFs and who knows how many mutual funds own it as well, so it didn’t lack buyers, and most widely held stocks typically act in the same manner. 

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