Netflix Tests Key Level Ahead Of Its Earnings Report

Key Points

• Netflix stock has had an impressive 2024, gaining 44% in its stock price. 
• After four consecutive quarters of high earnings, should traders of Netflix stock expect any different come October’s Q3 earnings?
• This year, Netflix has been dabbling in live entertainment, but its move into live sports is a big deal. 
• Can Netflix break the resistance at $700, and what is Netflix’s stock ceiling this year?

Market Overview

Netflix has had an impressive 2024 so far, with the stock price up 44% on the year. The current price of Netflix stock’s last closing price is $675, and it has now recovered all of the losses seen in 2022 when there was a global market sell-off, but Netflix was also losing subscribers. Perhaps more surprisingly, Netflix stock is the only major publicly traded streamer to trade up to the all-time high share prices achieved during the COVID-19 pandemic. You may remember Netflix gained significant amounts as everyone was at home buying subscriptions.

The question now, as Netflix flirts with all-time highs, is whether Netflix can break above the key resistance area of $700 to make a broader move higher. We can look at several factors; some are industry-related, and others are Netflix-specific. 

Netflix Continues To Impress During Earnings Season

The Q2 Netflix earnings report was another solid one, with the stand-out performance coming in added subscribers. Netflix added 8.05 million subscribers, which surpassed expectations of 4.53 million. This took the streaming video leader’s total subscribers worldwide to a whopping 277.65 million. 

Netflix earned $4.88 a share on revenue of $9.56bn in the second quarter. This beat estimates once again, as analysts expected $4.74 a share on revenue of $9.53bn. Its revenue is now up 48% from the same time last year. This is now the fourth quarter of higher revenue growth, so why should next quarter be any different?

Netflix’s next earnings report is on October 14th, and the early indications are that it could be another impressive one. On August 7th, Disney announced it would raise its prices for all tiers of Disney+, Hulu, and ESPN+. Jefferies analyst James Heaney believes this gives Netflix scope to raise its prices, potentially increasing its revenue for the quarter. Furthermore, Netflix’s continuation to release popular sports documentaries will likely keep the audience engaged. There are new ones planned soon, such as an NBA docuseries, The Greatest Rivalry – India vs Pakistan, Ángel Di María: Romper La Pared, and many more. 

Netflix Moving Into Live Entertainment 

A factor likely to keep Netflix at the top of the tree for the foreseeable future is its movement into live entertainment, in which a big live event is just around the corner. On November 15th, Netflix will broadcast a highly anticipated boxing match between Jake Paul and the one and only Mike Tyson.

In addition, Netflix will stream two live NFL games on Christmas Day this year and is in talks to host a football game in 2025. Netflix has previously dabbled in live shows, such as a Chris Rock comedy show, but moving into live sports will only elevate the benefits this has on the company.

Netflix Doubling Down On Advertisement Strategy

In 2022, Netflix stock fell by a staggering 51% due to a lack of subscriber growth. During this time, Netflix’s strategy centered solely on growing global subscribers, which worked so well for them in 2020.

However, all successful companies will likely need to reevaluate their efforts, and Netflix is no different. Therefore, Netflix decided to add an advertising-supported service at a lower price, and it has paid dividends for the streaming giant. After all, we are all used to seeing ads on YouTube anyway. At the same time, there has been a crackdown on sharing accounts, which has helped contribute to greater revenues for the firm.

Netflix Tests Key Resistance Level – NFLX Price Forecast

The Netflix chart below shows how $700 has acted as resistance on four different occasions this year. The bears could argue this is a sign of a move lower into the mid-650s at least.

However, $650 could also be a fantastic support area because it is right on the 50% Fibonacci retracement. On the above NFLX daily chart, Fibonacci has been drawn from the swing low at $587 to the high at $712. From here, traders may want to utilize a lower time frame order block or Fair Value Gap (FVG) to maximize risk vs. reward. Moreover, according to MarketWatch, the average price target, ironically, stands at 700.79 (which also serves as a key resistance level). In this case, the average price target represents an increase of %3.7 from Netflix’s current stock price.

Overall, Wall Street analysts hold a bullish stock forecast for Netflix right now, with most analyst ratings suggesting a potential upside. However, NFLX stock forecast for the upcoming month largely depends on its earnings report in October. Also, with the recent sell-off in the market, it should be noted that any external factors, such as the potential for an economic slowdown, will significantly impact Netflix stock price targets. During a recession, one of the first ways to reduce costs is by cutting back on subscriptions, and with many ways to stream online, Netflix would likely suffer from an economic slowdown. Therefore, it is important to watch Netflix’s performance, specifically its earnings on October 14th, but also to be aware of the global economic data releases in the next few months. This will give you the best all-round view of Netflix stock.