Mixed Results From Netflix
The latest set of earnings from Netflix yesterday did little to encourage investors that the company is headed for a new ‘golden era’. On the headline figures, the numbers were broadly in line with expectations. EPS came in a little over forecasts at $2.85 vs $2.85 forecast while revenues were a little soft at $8.162 billion vs $8.177 billion forecast. To put these figures in perspective, during the same period a year prior the company reported EPS of $3.53 on revenues of $7.868 billion. However, it was the details of the report which was of more interest for investors.
Subscriber Growth Drops Again
In terms of negatives, new subscriber growth was seen falling short of analyst projections at 1.75 million vs 2.2 million forecast. Given the dwindling subscriber growth trajectory seen on the back of the pandemic these figures were clearly concerning for investors. Netflix stock fell initially as traders digest this data. However, the stock was seen bouncing back after hours as traders reacted positively to news that the company’s new ad service has been successful in driving revenues.
Guidance Lowered
Looking ahead, Netflix issued weaker-than-forecast profit guidance for the coming quarter. Wall Street had been looking for an EPS of $3.07 on revenues of $8.18 billion whereas Netflix forecast EPS of $2.84 on revenues of $8.24 billion. Given the mixed figures, near-term performance in the stock is likely to be more tied to broader tech sector performance and USD movements around Fed expectations.
Technical Views
Netflix
For now, Netflix shares remain within the large bull channel which has framed the recovery off last year’s lows. The correction from highs around 380 found support into the channel lows and 285.49 level with price currently holding around the 330.43 level. While this area holds as support the focus is on a continuation higher towards the 397.39 level next. To the downside, a break of the channel low and 285.49 level opens the way for a test of 251.90 support.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.