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Mixed Results From Netflix

The latest set of earnings from Netflix yesterday did little to encourage investors that the company is headed for a new ‘golden era’. On the headline figures, the numbers were broadly in line with expectations. EPS came in a little over forecasts at $2.85 vs $2.85 forecast while revenues were a little soft at $8.162 billion vs $8.177 billion forecast. To put these figures in perspective, during the same period a year prior the company reported EPS of $3.53 on revenues of $7.868 billion. However, it was the details of the report which was of more interest to investors.
 

Subscriber Growth Drops Again

In terms of negatives, new subscriber growth was seen falling short of analyst projections at 1.75 million vs the 2.2 million forecast. Given the dwindling subscriber growth trajectory seen on the back of the pandemic, these figures were clearly concerning for investors. Netflix stock fell initially as traders digest this data. However, the stock was seen bouncing back after hours as traders reacted positively to news that the company’s new ad service has been successful in driving revenues.
 

Guidance Lowered

Looking ahead, Netflix issued weaker-than-forecast profit guidance for the coming quarter. Wall Street had been looking for an EPS of $3.07 on revenues of $8.18 billion whereas Netflix forecast an EPS of $2.84 on revenues of $8.24 billion. Given the mixed figures, near-term performance in the stock is likely to be more tied to broader tech sector performance and USD movements around Fed expectations.
 

Technical Views

Netflix

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For now, Netflix shares remain within the large bull channel which has framed the recovery off last year’s lows. The correction from highs around 380 found support into the channel lows and 285.49 level with price currently holding around the 330.43 level. While this area holds as support the focus is on a continuation higher towards the 397.39 level next. To the downside, a break of the channel low and 285.49 level opens the way for a test of 251.90 support. 

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