Long Trade Idea
Enter your long position between $95.10 (Friday’s intra-day low) and $98.07 (Friday’s intra-day high).
Market Index Analysis
Netflix (NASDAQ:NFLX) is a member of the NASDAQ 100 Index, the S&P 100 Index, and the S&P 500 Index.
All three indices recorded fresh all-time highs, but bullish trading volumes remain below average, hinting at potential issues ahead.
The Bull Bear Power Indicator for the NASDAQ 100 Index surged into extremely bullish territory, suggesting excessive bullishness vulnerable to a reversal.
Market Sentiment Analysis
Equity futures are retreating this morning after the US-Iran tensions re-escalated following the capture of an Iranian vessel by the US. The Strait of Hormuz is closed again. President Trump renewed his threats to target Iranian energy facilities and civil infrastructure unless Iran listens to US demands. Oil is nearing $90 per barrel, while gold resumes its sell-off. Earnings from Tesla, Intel, and United Airlines highlight this week’s earnings calendar.
Netflix Fundamental Analysis
Netflix is the best-known over-the-top subscription video-on-demand service. It has its own production studios, acquires original programming, and showcases third-party content via its subscription-based streaming services. It also expanded into gaming and live sporting events.
So, why am I bullish on NFLX despite its post-earnings sell-off?
Netflix reported revenues of $12.25 billion and earnings per share of $1.23, beating expectations of $12.18 billion and $0.76, respectively, but shares tanked amid an uncertain outlook for the second quarter and the announced departure of Reed Hastings. Still, I remain bullish on Netflix amid pricing power, margin expansion, and an exciting in-house content library. I am equally bullish on its rapidly growing ad business.
Metric | Value | Verdict |
P/E Ratio | 31.49 | Bullish |
P/B Ratio | 13.16 | Bearish |
PEG Ratio | 2.04 | Bullish |
Current Ratio | 1.41 | Bearish |
ROIC-WACC Ratio | Positive | Bullish |
Netflix Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 31.49 makes NFLX an inexpensive stock. By comparison, the P/E ratio for the NASDAQ 100 Index is 38.57.
The average analyst price target for NFLX is $114.53. This suggests moderate upside potential with reasonable downside risk.
Netflix Technical Analysis
Today’s NFLX Signal
Netflix Price Chart
The NFLX D1 chart shows price action inside a horizontal support zone.
It also shows price action between its ascending 38.2% and 50.0% Fibonacci Retracement Fan levels.
The Bull Bear Power Indicator plunged into bearish territory below its ascending trendline, hinting at more short-term volatility.
The average bullish trading volumes are higher than the average bearish trading volumes.
NFLX dropped as the NASDAQ 100 Index rallied, a bearish signal, but bullish catalysts are accumulating.
My NFLX Long Stock Trade
NFLX Entry Level: Between $95.10 and $98.07
NFLX Take Profit: Between $113.34 and $116.73
NFLX Stop Loss: Between $86.50 and $90.69
Risk/Reward Ratio: 2.12
Ready to trade our analysis of Netflix? Here is our list of the best stock brokers worth reviewing.