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Netflix Stock – US Stocks Trading Analysis and Setups – Learn How I Trade US Stock Market Online From Nigeria via CFD Stock Brokers.
As of this writing, Netflix shares is currently selling for $367.67. On YTD, the stock up by 82.73% so far, a performance that is not unconnected to the media company’s market penetration strategy and increasing global acceptance outside the US.
In the most recent quarter, the company reported an EPS of $0.85 (27th, July 2018) which is $0.05 above analysts’ expectations hence a surprise of 6.25%. But, the stock witnessed a massive sell-off as Netflix’s declining subscribers base came out at 5 million against an estimated 6 million users, which resulted in a 26% drop in market capitalization.
What next as we look forward to the company’s quarterly report?
Netflix, Inc. is expected* to report earnings on 10/16/2018 after market close. The report will be for the fiscal Quarter ending Sep 2018. According to Zacks Investment Research, based on 14 analysts’ forecasts, the consensus EPS forecast for the quarter is $0.68. The reported EPS for the same quarter last year was $0.29.
As investors price in the possibility of a better than expected earnings spurred by a growing subscriber base outside the US and investment in premium contents. Netflix shares have regained strength from the low of $310 to its market price of $367, 18% appreciation.
A closer look at the stock price in the last 3 weeks of trading, $375 seems to be a very strong resistance (the red circle region marked with A) to breakthrough before it retests the pre-earnings stock price of $420.
Using sentiment analysis, Netflix is clearly bullish on short-term with price sitting above its 50-day SMA of $352. Investors expectations are high (rumour) with the RSI at 55. All these indicate a potential breakout, hence, I bought at $366 with a target profit of $400 and stop loss of $347. Since the 50-SMA is now acting as a support, it’s wise to set my stop loss below the average so that we can ride the volatility which, on average, is $13.
Update:
I had to close my trade for a paltry 3% profit after investors shun the global stock market for the US-Bond.
Rapidly rising Treasury yields (now at a 7-year high of 3.23%) are rocking equity markets around the globe, with high price-to-earnings tech stocks leading the decline,” said Yasuo Sakuma, chief investment officer at Libra Investments.
Netflix has since then suffered a sell-off from its recent month high of $385 to $361, the current share price as of this analysis. Although, it is still above my targeted exit price but I had to close the position to cut possible loss from general market sell-off.
While the media giant is expected to release its next earnings, we will be watching sentiments on the stock for possible re-entry.
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