Keep An Eye On Netflix (NFLX) This Evening
Netflix (NFLX) stock has been on a massive run the past 6 months, climbing over 76%. Which puts the company in a unique position.
On the one hand they’re doing incredibly well (you know how I like momentum) and on the other they have huge expectations to uphold. That’s why analysts are keeping a keen eye on Netflix’s first quarter 2024 earnings release (which is scheduled for release at 4:45 pm this evening).
With the recent moon-shot performance of the stock, that makes things a bit tricky this earnings season. With Deutsche Bank sharing: “We believe that in order for the stock to appreciate further, consensus estimates for 2024 to 2025 will need to be revised higher, as we believe a lot is already priced in at these valuation levels.”
This “priced in” phenomenon happens a lot with strong stocks and we often see them selling off unless they absolutely crush earnings which I think is a big ask for Netflix.
One sneaky thing to consider: If Netflix does crush earnings, it will make me believe that as folks have cut costs due to inflation, Netflix is the primary choice they kept. Meaning we could see much weaker earnings on cable and other subscriptions coming after Netflix (Hint Hint: Disney).
This evening, we will also see how well the company’s crackdowns on password sharing and ad-supported membership have affected their bottom line (tell me the truth, did you really get a new account after your brother’s kicked you out for simultaneously watching shows?)
In situations like these I don’t mind taking speculative bets, for me it’s all about managing the capital side of that. Which is why I teach strategies like Jump Trades, to reduce your costs so when you do play on the more speculative side, you’re not having to fork over thousands of dollars on trades with a good chance of heading to 0.
In summary:
- Is Netflix growth priced in? Watch for selloffs
- If Netflix beats, watch for the domino effect on other entertainment subscriptions
- If you do play the earrings game, be sure to cut down your risk with smart trades
— Nate Tucci
P.S. Speaking of speculative ideas… Another reminder to join us Friday, April 19th @ 2pm Eastern for our free Publisher’s Roundtable session where I’ll be joined by 3 expert panelists to share out top “moonshot” trade ideas.
