Is NFLX Now A Buy?

NFLX is down over 10% at $322.23. Netflix was expected to add 5.06M new subscribers but added just 2.7M which is also below the 5.5M from Q2 2018.

InvestingCube's S&R Levels

NAS100

NAS100 (11163.8)

In Buy Zone

STOP

BUY

TP1

11479

TP2

11923

The problem is in US paid subscribers; we had a decline of 126,000 while the expectations looking for a gain of 309,240. The missed subscriber forecast was across all regions, but slightly more in regions with price increases. The company blamed its weaker-than-expected subscription results on its second-quarter content offerings, but I believe It was only the increased price that drove members away. Company needs to adjust price very fast according to the content they offer.

What I like is that the International paid subscribers increased by 2.83 million, vs. gain of 4.75 million expected

Also the company ended the quarter with 151.56M global paid memberships, a growth of 21.9% yearly.

Revenue grew 26% to $4.92B as per expectations. ARPU rose 3% as reported and 9% excluding negative forex effects another area of improvement.

I really like the correction today as it gives the opportunity for someone who missed the party to get in and the reason is that the company managed to increase earnings per share at 60 cents, beating forecasts of 56 cents. That is exactly the company that I like, even with less than forecasted clients growth to beat EPS estimates. I expect that as the dust from the missed new subscribers figures settle down, investors will focus on financial data and bottom line and return to the stock.

For Q3, NFLX expecting to grow by 7M paid memberships versus 6.1M in Q3 2018. It sees Q3 revenues at $5.25B and EPS at $1.04.

On the technical side the picture doesn’t look pretty as the price open the session with a huge gap down, but for today intraday traders can look for en entry point at 318 the low from January 22, for more conservative and patient investors 303 is the price to buy which is the yearly low from January 7th. The long term international expansion for NFLX makes it a stock that can help portfolios achieve better and well diversified returns.Don’t miss a beat! Follow us on Twitter.