Netflix (NASDAQ 🙂 is 37% higher than YTD, considerably more than the gain of less than 20%. And although the video stream giant only performed slightly better than the rest of its FAANG cohort – Facebook Inc (NASDAQ 🙂 + 34%, Apple (NASDAQ 🙂 + 25%, Amazon (NASDAQ 🙂 + 26%, excluding Google ( NASDAQ :), an increase of only 3% – Netflix & # 39; s recovery has become a benchmark for other companies.
But most of that dramatic recovery took place in January, when the shares reached 27% after a strong performance. Thereafter, despite defeating both income and income in the 16th quarterly report of April 16, the company's weak guidelines, exacerbated by the retirement of the CMO Kelly Bennett, left the fuel-free shares. It is now 2.5% below its price of 17 April.
Where from here? Well, that's cloudy.
There are, such as RBC Capital's analyst, Mark Mahaney, who expects the stock to double within three years thanks to increasing penetration abroad, healthy customer satisfaction and much more content lining up the viewers on their to paste the screen. On the other side of the trade we have Gene Munster, managing partner and co-founder at Loup Ventures. He is not that optimistic, due to rising costs, increased competition and believes the company is plateaued.
David Trainer from Sum Zero sees equity calibration, stating huge spending, and says that subscriber growth should be disregarded unless the company is able to monetize its original content before the competition achieved market share. Half of the world's population who sign up for the streaming service must justify its value of $ 350 per share, which Trainer considers unrealistic.
We tend to agree with the latest outlook based on the technicals of the stock.
The trade pattern forms an H&S summit. The 200 DMA retraces the neckline of the pattern, underlining its meaning and raising the pessimistic outlook if it fails to support the price.
The implicit target is $ 300, a round psychological number that brings together vested interests in the December summits
However, if the company is hit by bad news, such as disappointing Q2 revenues that are due in mid-July, this would push the stocks below the lows in December. It would then have posted the second trough needed for a long-term downtrend (according to the more mild interpretation of recording the June peak of the uptrend).
Trading Strategies
Conserving traders would wait for a lock below the $ 330 level to minimize the risk of a bear fall, and then wait for the expected return movement to verify the neck resistance or the 200 DMA, with at least one long, red candle that floods a green or a small candle of both colors.
Moderate traders can be satisfied with an amount below the lowest price of $ 332, followed by a withdrawal for better entry, but not necessarily to verify the reversal.
Aggressive traders are likely to shorten a deficit below 200 DMA. However, waiting for an upward correction would result in a much more manageable risk-return ratio
Trade sample
Listing: $ 340
Stop loss: $ 345
Risk: $ 5
Target: $ 325
Reward: $ 15
Risk-Reward Ratio: 1: 3
