Netflix And FANG Lead The Stock Market Higher


Netflix and FANG Lead The Stock Market Higher January 15

They’re baaaack! FANG (FB, AMZN, NFLX, GOOGL) had a big day today, and you can thank Netflix for stoking the fire. The company announced a price increase for its U.S. services. It took the FANG complex up. As a result, the stock market managed to post a solid day of gains, with the S&P 500 rising 1% to 2,610. The NASDAQ had a solid day rising nearly 1.7% to 7,022.

Brexit, What About It?

How vital is FANG to the market? Very. How do we know? Today, of course, was the Brexit vote and it was a historical loss for PM May. She lost by 230 votes - Brexit, one of the most massive landslides in UK history! What happens next? I have no idea.

Stocks dipped briefly, but then snapped right back. A month ago, a Brexit vote went south, and the market tanked. Has the mindset of investors changed? Absolutely.

S&P 500 (SPY)

The S&P 500 (SPY) now appears to be on pace to rise to 2,630, a level we have been patiently been waiting for over the past couple of weeks. Additionally, the index appears to be crossing above the downtrend which formed at the beginning of October.

spx, spy, sp500

NASDAQ (IXIC)

The NASDAQ also broke one of its downtrends, with one more to go. A jump above 7,026 and the index can go on to rise to around 7,125.

nasdaq,

Netflix (NFLX)

The big news came from Netflix when the company said it would raise prices in the US. The stock jumped about 6.5%. I can’t imagine that Netflix would raise prices just two days ahead of earnings if Subscriber growth in the fourth quarter were weak.  Trends have been hot! The next level of resistance comes around $380.

The company did the same thing in October 2017, when company raised prices. Then they reported better than expected subscriber growth a few days later.

If it happens, that means that Netflix would have added nearly 10 million subscribers in the fourth quarter. Crazy.

I have often argued that Netflix could raise the price of the service to $25 a month, and people would gladly pay. Go to the movie it cost $15.50 where I live, to see one movie, one time. On Netflix, hate the movie? No problem find something new. Go to the theatre to see the film, hate it, leave unhappy. Oh, and you have spent about $35 for two people to go.

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Disclosure: Michael Kramer and the clients of Mott Capital own NFLX, GOOGL, more

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Comments

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Adam Reynolds 3 months ago Member's comment

Netflix is great, but I certainly wouldn't pay $25 a month... still too much competition for that. If ALL the streaming services increased by so much however... I might have to.

Carol Klein 3 months ago Member's comment

Keep in mind, #Netflix specifically mentioned original content as one of the reasons for the price increase. I wouldn't pay $25 per month for it's current offerings, but throw in several more shows of the same calibre as House of Cards and other hits... I just might. Such an increase could pay for A LOT of new programming. But I don't expect them to ever price it that high.

Danny Straus 3 months ago Member's comment

Eh, if it ever got to be that expensive, I'd just go back to downloading my content or watching it on one of the countless apps that let you get access to movies and shows for free.

Ayelet Wolf 3 months ago Member's comment

Danny, Isn't that illegal?

Danny Straus 3 months ago Member's comment

I plea the 5th, Ayelet! :)

Barry Hochhauser 3 months ago Member's comment

They'll figure out the appropriate balance. As long as they can make more money raising prices, than they lose from lost subscribers, it will bode well for $NFLX's price.

Alexis Renault 3 months ago Member's comment

Michael J. Kramer, why don't you include $AAPL in your coverage? Isn't #Apple included as part of #FAANG?