Analyzing Netflix’s Chart After Earnings

26 de jul.

Streaming giant Netflix NFLX beat Wall Street’s consensus view on both top- and bottom-line Q2 results last week –- but the stock fell 1.5% the next day anyway. What might technical analysis tell us about where the stock goes from here?

As a reminder, Netflix reported a week ago Thursday after the bell that it earned $4.88 per fully diluted share during Q2 on $9.56 billion of revenue, beating the consensus $4.74 EPS and $9.53 billion in sales that analysts had expected.

The company’s 8.05 million in additional global paid memberships also surprised analysts in a good way, while management’s bottom-line guidance of about $5.10 in GAAP earnings per share for Q3 crushed the $4.74 or so that the Street was looking for. (The company’s $9.73 billion of Q3 top-line guidance came in a little shy of what analysts had expected.)

Looking at a regression model of Netflix’s recent chart, readers will see that the stock has been in an ascending price channel since May 2022, as represented by the blue and pink shaded areas in the graph below:



That ascending channel is more than two years old now, which brings to mind two famous Wall Street sayings: “The Trend Is Your Friend” and “The Trend Is Not Broken Until It Breaks.”

Netflix’s Potential Support and Resistance Levels

Now, let’s zoom into Netflix’s chart for the November 2023-July 2024 period, which more clearly shows the stock’s recent price action (as denoted by the line of green and red bars in the chart below):



We can see at the right side of the chart that NFLX is fighting to stay above the stock’s 50-Day Simple Moving Average (as denoted by the blue line above).

Now, that line has been pierced, but as long as the daily range maintains contact, the 50-Day SMA has not been actually been broken as far as technical analysis is concerned.

However, should Netflix fail to hold its 50-day SMA line as support, there isn’t much in the way of help technically for a long way down.

The stock’s 200-Day Simple Moving Average (the red line above) and the 23.6% Fibonacci retracement of Netflix’s entire rally (the purple line) are both about $100 below the stock’s July 24 price action.

Conversely, the pivot to the upside -– Netflix’s $697 early July high -- is fairly far away from the stock’s July 24 close as well.

In other words, Netflix would have to move up or down pretty significantly to hit one of these lines and change its technical picture.

In the meantime, one might consider trading the stock shorter-term around its 50-Day Simple Moving Average and its rapidly descending 21-day Exponential Moving Average (denoted by the green line above).

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