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Netflix today

$837.69 -37.31 (-4.26%)

As of 01/10/2025 16:00 Eastern

52 week range

$475.26

▼

$941.75

P/E ratio

47.41

Target price

$824.00

Netflix NASDAQ: NFLX revolutionized the way the world consumes entertainment. However, Netflix stock recently experienced a pullback from its all-time high of $941.75 reached on December 11, 2024. The stock is currently trading around $875.00, down 1.83% year-to-date. However, the decline followed a banner year in which the stock rose more than 81%.

Investors are left wondering whether the pullback is a sign of trouble or a golden opportunity to buy shares of a company with a proven track record and a bold new strategy. A closer look at Netflix’s technical indicators, analyst sentiment, and strategic initiatives suggests that the current downturn may indeed represent a buying opportunity for those with a long-term view.

Technical signals suggest potential rebound

Technical analysis offers some intriguing clues about the current trajectory of Netflix stock. One key indicator is the 50-day moving average, which is the average closing price of a stock over the last 50 trading days. Netflix stock is currently approaching that 50-day moving average, which is a potentially significant development. Looking back at past performance, it’s worth noting that after similar approaches to this moving average following a period of trading above it, Netflix stock has historically shown a rebound trend. In fact, data over the last few years shows that such an event resulted in positive returns a month later 63% of the time, with an average gain of 4.6%. This model suggests that the current pullback could be a temporary dip ahead of a potential rebound.

Further support for this bullish outlook comes from the activity seen in the options market. The 10-day put/call volume ratio, which measures the ratio of put options (bet that a stock will fall) to call options (bet that a stock will rise), is currently 1.11 on the major options exchanges. This ratio is higher than 97% of last year, indicating a significantly higher-than-usual level of bearish sentiment among options traders. Often, when pessimism reaches such a high level, it can be the opposite indicator. This suggests negative sentiment may already be priced into Netflix’s share price, potentially leaving room for a move higher if the company’s fundamentals remain strong. In addition, current volatility expectations reflected in option prices are relatively low. This makes options strategies potentially more attractive for those looking to benefit from a possible recovery.

Analysts remain optimistic despite recent declines

Despite the recent drop in stock prices, many in the Netflix analyst community remain optimistic about Netflix’s future. The consensus rating for the stock is Moderate Buy, with an average price target of $824.30. While this target is slightly below the current trading price, it is important to note that some analysts have recently upgraded their ratings and increased their price targets.

Notably, Pivotal Research has set a maximum price target of $1,100.00, reflecting strong belief in Netflix’s long-term growth potential. Moreover, 17 out of 31 analysts currently rate the company’s stock as a Hold or worse, suggesting that there is ample room for upside if the company continues to successfully execute on its strategic initiatives. These updates and revised price targets often follow positive developments, such as the successful launch of NFL games on the platform.

A Closer Look at the Basics

Netflix’s financial performance provides a solid foundation for its future growth. Netflix’s fiscal third quarter 2024 (3QFY24) earnings report showed earnings per share (EPS) of $5.40, beating analysts’ consensus estimate of $5.09. Revenue for the quarter reached $9.82 billion, also beating expectations. Netflix forecast revenue growth of 14% to 15% for all of 2024 and raised its operating margin forecast to 26%, up from its previous forecast of 25%. Such strong financial performance demonstrates the company’s ability to generate significant profits and effectively manage costs. Analysts forecast earnings growth of 19.46% next year.

Content remains king

Netflix’s live sports has seen early success with NFL Christmas games and WWE’s “Monday Night Raw.” These NFL games averaged more than 30 million viewers worldwide, making them the most watched in U.S. history. “Monday Night Raw” also drew an impressive 4.9 million viewers, topping its recent viewership total.

Netflix’s vast library of content and commitment to original programming remain its core strengths. Shows like Squid Game and Heeramandi became global hits and the company received 107 Primetime Emmy Award nominations. Netflix is ​​also testing a new homepage design and has a long list of upcoming releases.

A calculated risk worth considering?

The recent decline in Netflix shares, while troubling to some, represents an attractive opportunity for investors with a long-term horizon. The company’s move into live sports has been successful, attracting record viewership and demonstrating Netflix’s ability to operate on this new front. This, coupled with a strong content strategy that continues to generate critical acclaim and commercial success, strengthens the company’s position as a global leader in entertainment.

Netflix’s strong fundamentals, including healthy revenue growth, expanding profits and a growing subscriber base, suggest that the company is well positioned for further expansion, despite intense competition in the streaming sector and significant costs associated with live sports rights. broadcasts and production of original content. Additionally, technical indicators, coupled with the potential for further analyst upgrades and the inherent value of the growing advertising business, provide bullish prospects for the stock’s recovery. Investors considering taking a position in Netflix should carefully weigh the risks. However, the current downturn may well represent a strategic entry point for the company as it continues to redefine the future of the entertainment industry.

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