How to Trade Netflix After Q1 Performance
Since Netflix’s 77% price crash from its record high of $700.99 in November 2021 to its multi-year low at $162.71 in May 2022, the management team have been trying to stabilise its share price in the face of an increasingly competitive streaming sector.
The share price is currently up more than 100% from its May 2022 low but has remained fairly range based this year so far. All eyes have been on Netflix’s first quarter earnings results and new initiatives such as a crackdown on password sharing and its new ad-based streaming model.
Learn more about Netflix stock below and what the analysts are forecasting for the stock.
|Symbol for Invest.MT5 Account:||NFLX|
|Date of Idea:||19 April 2023|
|Time Line:||1 - 6 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Netflix Q1 2023 Performance Breakdown
Here are some of the key highlights from the latest fiscal first quarter earnings report from Netflix:
- Earnings per share of $2.88 vs $2.86 expected
- Revenue of $8.16 billion vs $8.18 billion expected
- Earnings of $1.31 billion, lower than the $1.6 billion from last year
- Revenue up to $8.16 billion from $7.87 billion the prior year
- Added 1.75 million subscribers missing analyst estimates of 2.06 million
- $17 billion to be spent on content in 2024
Last year, Netflix lost more than 200,000 subscribers in what was its first subscriber loss in a decade. They only added 9 million subscribers by the end of the year which is half of the 18 million gained in the year before. This caused a huge crash in Netflix’s share price.
The company has been trying to boost its profit and subscriber numbers by offering a cheaper ad-supported subscription while also cracking down on password sharing. The cheaper subscription which comes with commercials costs $6.99 per month and started last November. The management team have stated they are planning to offer more ad-supported tiers in the future but no figures or expectations have been provided yet.
Netflix has also stated that around 43% of its global user base, more than 100 million households share the same account. In the second quarter, there will be a broad crackdown on this to try and increase the company’s revenue. In the earnings call, management said people will initially cancel but then slowly return and sign up for their own accounts. They saw this happen in Latin America and are now seeing more revenue as a result.
Of course, one of the issues is that if Netflix’s content is not good enough those people may not decide to come back. There are now many more choices for streaming content such as Disney+, HBO MAX, Apple+, etc. It is now a very competitive industry so diversification will be important for investors to avoid being too concentrated on the success or failure of just one company.
Netflix Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for a Netflix stock forecast in the past 3 months, there are currently 16 buy, 16 holds and 2 sell ratings on the stock. The highest price level for a Netflix stock forecast is $440.00 with the lowest price target at $230.00.
The average price target for a Netflix stock forecast is $360.28.
An Example Trading Idea for the Netflix Stock Price
An example trading idea for the Netflix share price could be as follows:
- Buy the stock on a break above $353.00 to allow for current volatility.
- Target just below the highest analyst price target of $440.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Netflix shares:
- If target is reached = $870.00 potential profit ($440.00 - $353.00 * 10 shares).
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering how far Netflix’s share price has already risen and the competitiveness in the streaming sector.
Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Netflix stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Netflix Stock in 4 Steps
With Admirals, you can buy shares in companies like Netflix with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Click on the banner below to trade Netflix stock today! ▼▼▼
Do You See the Netflix Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Netflix's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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