Didn’t think things could get worse with Netflix (NFLX)? Think again. The stock is getting bludgeoned on earnings, down about 35% on Wednesday after the company reported its results on Tuesday after the close.
In after-hours trading, Netflix stock was down anywhere from 25% to 27%. It wasn’t pretty, particularly for a stock that was already down 50% from its all-time high made in November.
While the markets opened higher on the day, Netflix is spreading its carnage around. High-growth stocks quickly posted notable losses in the morning, while Roku (ROKU), Disney (DIS) and other streaming related platforms are also under pressure.
However, they are holding up much better than Netflix. The Action Alerts PLUS team says Netflix’s stumble doesn’t extend to Disney.
Netflix beat on earnings expectations, missed on revenue estimates and reported a decline in subscribers. Worse, its outlook for next quarter was worse than analysts were expecting.
Put it all together and Netflix stock is suddenly down almost 70% from its all-time high as the stock works on logging its sixth straight monthly decline.
Trading Netflix Stock
Chart courtesy of TrendSpider.com
The decline has been stunning. It’s hard to believe a company as big as Netflix could fall 70% from its highs just five months ago. While the overall markets haven’t been doing great, they have held up pretty well considering all the current headwinds.
The fact that Disney and Roku are getting hit but not crushed suggests to me that Wall Street views Netflix’s issues as company-specific problems and are not broad-reaching across the streaming industry.
Still, that does little to ease the pain of those who are long Netflix stock.
Shares knifing through the $235 to $250 support area — including a decline below the March 2020 Covid low — really makes a statement.
If Netflix stock stays below this area, bulls have to be aware of the potential for it to test down into the $200 level and the 50-quarter moving average (green line). That comes into play near $188.
Below that could open the door to the 200-month moving average, but that’s still a long ways off at $140.
More specifically, we have a reactionary low to measure against thus far, down at $212.50. For aggressive buyers who are now long, they need to see the stock hold above the mark.
Below it and we could see a move down to the levels mentioned above.
On the upside, I want to see if the stock can reclaim $345. Above it opens the door to $250. Above $265 puts $285 to $290 on the table.
