Netflix Stock Plummets 20%: A Technical Analysis

Netflix Stock Plummets 20%: A Technical Analysis

Netflix Inc. NFLX shares are plummeting Friday after the company announced fourth-quarter financial results and issued guidance below estimates.

Netflix reported quarterly earnings of $1.33 per share, beating the estimate of 82 cents per share. The company reported quarterly revenue of $7.71 billion, slightly under estimates.

Netflix was down 20.02% at $406.52 midday Friday.

Netflix Daily Chart Analysis

  • The $575 level was an area that held as resistance for a time but later turned into support after it was able to hold above this level. Now, back below the level it will likely become resistance once again. Breaking below this level confirmed the head and shoulders pattern and the stock went on to see a strong bearish move.
  • The stock trades below both the 50-day moving average (green) and the 200-day moving average (blue). This indicates bearish sentiment, and each of these moving averages may hold as an area of resistance in the future.
  • The Relative Strength Index (RSI) saw a huge drop lower Friday and sits at 10 on the indicator. This is extremely far into the oversold region and shows that there are many more sellers in the stock than there are buyers.

(Click on image to enlarge)


What’s Next For Netflix?

The bearish head and shoulders pattern was confirmed when the stock price fell back below the $575 level. The break below this level hinted that stock was ready to see a further bearish move and then it did occur.

Bears are in total control of the stock and are looking to see it continue to drop lower in the next few days. Bulls are looking for a bounce and for the stock to begin trending higher once again. Bulls are looking for higher lows to confirm the upward trend.

© 2022 Benzinga does not provide investment advice. All rights reserved.

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