Netflix Inc
Netflix Inc
NFLX
$1.63
0.38%
9%
IBD Stock Analysis
- Stock near buy point of 449.62 from short consolidation above prior base
- New buy point would be an add-on entry, but small position is possible
- Netflix broke out of six-week cup base April 13 with buy point at 393.62
Industry Group Ranking
Emerging Pattern
Consolidation
* Not real-time data. All data shown was captured at
1:27PM EDT on
05/13/2020.
Netflix (NFLX) is the IBD Stock Of The Day as the internet television network benefits from entertaining shut-ins during the Covid-19 coronavirus pandemic. Netflix stock is approaching a fresh buy point.
X
Los Gatos, Calif.-based Netflix posted a huge subscriber gain in the March quarter after governments shut movie theaters and sports and live entertainment venues to slow the spread of Covid-19. Consumers stayed at home and were entertained increasingly by streaming video services and video games.
Netflix added 15.77 million new subscribers in the first quarter, crushing views for about 8 million. It ended the quarter with 182.86 million subscribers worldwide.
For the second quarter, Netflix expects to add 7.5 million new subscribers as home quarantines continue.
Netflix Stock Just Below All-Time High
In afternoon trading on the stock market today, Netflix stock rose a fraction, near 433.45. Earlier in the session, it was up as much as 3.5% to 447 during a rough day for the overall market.
Netflix stock is nearing a buy point of 449.62 from a short consolidation above its prior base. Technically, the new buy point would be an add-on entry point, a chance to add shares to an existing position in the stock. But investors could start a small position here as well, according to IBD investing principles.
A pause in the stock market rally or a pullback could offer more time for Netflix stock to form a traditional consolidation.
On April 13, Netflix stock broke out of a six-week cup base at a buy point of 393.62, according to IBD MarketSmith charts. The chart also could be interpreted as a cup with handle with a 383. 11 buy point. It snapped back from a 26% correction during the coronavirus-fueled market sell-off. Netflix stock raced to an all-time high of 449.52 on April 16, three trading days before its first-quarter earnings report.
Internet TV Services Hurting Traditional Pay TV
On Tuesday, Pivotal Research Group analyst Jeffrey Wlodarczak reiterated his buy rating on Netflix stock with a price target of 580. In a note to clients, he said the outlook for Netflix is “attractive” while the forecast is “awful” for traditional pay-TV operators.
“While trends have been ugly in pay TV (about 20 straight quarters of accelerating year-over-year declines), they continue to get worse on the launch of powerful new direct-to-consumer platforms led by Disney+,” he said. Launched in November, Walt Disney‘s (DIS) Disney+ had 54.5 million subscribers as of May 4.
Pay-TV subscribers have been “cord cutting,” abandoning conventional TV programming for video-on-demand services like Netflix and Disney+, Wlodarczak said.
Netflix Content Pipeline Secure Into 2021
While broadcast and cable TV networks are facing a shortage of programming later this year because of production shutdowns related to Covid-19, Netflix has a stockpile of new content that will last into next year.
“Its pipeline of new original content is secure well into 2021,” Bernstein analyst Todd Juenger said in a note to clients Wednesday. “This is primarily a result of Netflix’s ‘straight-to-series’ production approach, which creates a significantly longer lead time between the completion of principal photography, vs. when the show is ready to air. Which in this circumstance, turns out to be a huge benefit, as post-production can be accomplished remotely.”
Juenger rates Netflix stock as outperform with a price target of 504.
Netflix’s hit original content recently has included shows such as “Dead To Me,” “Love Is Blind,” “Outer Banks” and “Ozark.”
Netflix stock ranks fourth on the IBD 50 list of top-performing growth stocks. It’s also on IBD’s prestigious Leaderboard watchlist.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
YOU MAY ALSO LIKE:
Is Apple Stock A Buy After March-Quarter Earnings Surprise?
Video Game Stocks To Buy And Watch, Including Esports Stocks
Get Full Access To IBD Stock Lists And Ratings
How To Research Growth Stocks: Why This IBD Tool Simplifies The Search For Top Stocks
Get Stock Ideas From IBD Experts Each Morning Before The Open
