Can Netflix Inc. (NFLX) Stock Fill January 2022 Earnings Gap?

• NFLX stock fell 3.25% in a week but gained 36.98% YTD and 69.45% in a year. 
• The ongoing Writers Guild of America strike is affecting the entertainment industry. 

Netflix Inc. (NASDAQ: NFLX) trades at $408.29, jumping 0.93%, while the entertainment stocks battle WGA allegations. The striking Writers Guild of America (WGA) urged federal regulators on August 17, 2023, to increase oversight over the streaming media business. They allege that Walt Disney Co. (NYSE: DIS), down 0.093% at $85.88, Amazon.com Inc. gaining 1.10% at $134.68, and Netflix amassed too much power. 

Netflix Inc. (NFLX Stock) – Financial Analysis

Cerrro Pacific Wealth Advisors LLC reduced its holding by 25.6% in Q1 2023; its current portfolio is worth $510,000. The price of T Rowe Associates Inc. increased its position by 16.1% in Q4 2022 and owns 13,244,508 shares worth $3.9 Billion. Geode Capital Management LLC also swelled its position by 1.6% during Q4 and now owns 8,058,257 shares worth $2.37 Billion. Such alterations secure the brand image of the streaming giant. 

Sales in Q2 2023 were $8.19 Billion, gaining 0.32% from the previous quarter, while gross income comes at $3.51 Billion. Gross income grew by 4.64%, while in Q1 2023, it gained 37.17%. Netflix reported a net income jump of 13.98%, while funds from operations were $1.48 Billion. Capital expenditures were negative $100.97 Million, falling by 62.81%. 

Netflix Inc. (NASDAQ: NFLX) – Technical Analysis

NASDAQ: NFLX, at press time, is trading at $408.29, gaining 0.93%; previous close and open were at $404.53 and $402.53, respectively. The 52-week range is from $211.73 to $485.00, suggesting a solid push could create new highs. With an average volume of 7.21 Million shares, the market cap is $180.932 Billion. 

The trailing twelve months (TTM) price to earnings (P/E) ratio is 43.30, meanings that investors are paying higher stock prices compared to its earnings. The twelve-month forward PE to Growth (PEG) ratio is 1.37; experts argue that the market overvalues NFLX stock price. 

Analysts placed a 2.57 rating for moderate buy and estimated a price target at $426.41 with an 4.4% upside. 

Netflix reported Q2 earnings on July 19, 2023, where the reported revenue of $8.187 Billion failed to surpass the expected value of $8.287 Billion by 1.20%. In comparison, the reported earnings of $3.29 per share surpassed the estimated $2.854 per share by 15.26%. This earnings report caused the NFLX stock to fall by 15% around earnings before pulling back. 

Compared to the previous quarter, revenue gained 2.72%, while EPS jumped by 2.81%. Netflix will announce subsequent earnings on October 17, 2023, where revenue could be around $8.53 Billion and the earnings to be around $3.508. The TTM revenue comes at $32.13 Billion, and year-over-year (YoY) quarterly revenue growth is 2.70%. 

Netflix Inc. (NFLX Stock) – Candle Exploration

In January 2022, the earning NFLX stock registered a significant gap downwards and the stock price action has been trying to fill the gap ever since. After March 2023, NFLX’s share price action was positive and almost breached the gap but was not strong enough to fill the gap.

The drop continues unless the price bounces off 200EMA or immediate support at $353.75. The price fell below 50EMA for the first time since May 2023. Ascending 200EMA and RSI at 40.23 hints at a price jump. Next bullish momentum would be visible if the price crosses and sustains above the gap to be filled. 

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto assets and stocks comes with a risk of financial loss.