Netflix Stock Fundamental Analysis
In the March quarter, Netflix earned $3.53 a share on sales of $7.87 billion. Wall Street had predicted Netflix earnings of $2.90 a share on sales of $7.93 billion. On a year-over-year basis, earnings fell 6% while sales climbed 10%.
For the June quarter, Netflix expects to earn $3 a share on sales of $8.05 billion. Analysts had predicted earnings of $3.03 a share on sales of $8.22 billion.
But investors have focused on the company's first drop in subscribers in over a decade.
The Wall Street Journal reported that Netflix now plans to focus on profitability and to curb its profligate spending. It also hopes to increase its revenue by adding a lower-priced, advertising-supported service tier. Plus, it is looking to monetize rampant account sharing on the service.
Netflix Content Draws Subscribers
Since it started its original content push, Netflix has launched quite a few hit shows. They include "Stranger Things," "Ozark," "Bridgerton" and "The Witcher."
It also has premiered popular original movies such as "Bird Box," "Extraction," "Murder Mystery," "Spenser Confidential" and "The Old Guard."
Recent buzzworthy shows on Netflix include TV series "Squid Game," "Inventing Anna" and "All of Us Are Dead." Popular new original movies include "The Adam Project," "Don't Look Up" and "Red Notice."
Meanwhile, Netflix is facing competition from traditional media companies. HBO Max from Warner Bros. Discovery (WBD) launched in May 2020. Comcast (CMCSA)-owned NBCUniversal followed in July 2020 with Peacock. Paramount Global (PARA) launched Paramount+ in March 2021.
Other services include Amazon (AMZN) Prime Video, Apple's (AAPL) Apple TV+, Walt Disney's (DIS) Disney+, Hulu and more.
Netflix Enters Video Game Market
To create a stickier service, Netflix added mobile video games as part of its subscription offering in November. Subscribers can play the ad-free games on Android and Apple iOS smartphones and tablets.
Since September 2021, Netflix has purchased three game studios. It bought Night School Studio, Next Games and Boss Fight Entertainment.
Netflix currently offers about 20 games to subscribers. They include action, arcade, puzzle, racing, sports and casino games.
Netflix Stock Technical Analysis
On Sept. 2, Netflix stock hit a buy point of 593.39 out of a 31-week consolidation period, according to IBD MarketSmith charts. It climbed to a record high of 700.99 on Nov. 19. But NFLX stock soon tumbled in a sell-off of tech stocks.
Netflix stock provided two clear sell signals before its plunge after its fourth-quarter earnings report in late January.
Netflix stock has a terrible IBD Relative Strength Rating of 4 out of 99. The rating shows how a stock's price performance stacks up against all other stocks over the last 52 weeks.
It has a subpar IBD Composite Rating of 34 out of 99. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Is Netflix Stock A Buy Right Now?
Netflix stock is not a buy right now. It needs to form a new base in the right market conditions before setting a potential buy point. Check out IBD's Big Picture column for the current market direction.
In a negative sign, Netflix stock is trading well below its 50-day and 200-day moving average lines.
Also, Netflix stock has a worst-possible IBD Accumulation/Distribution Rating of E, indicating heavy institutional selling of its shares.
NFLX stock ranks fifth among 23 stocks in IBD's Leisure-Movies & Related industry group, according to the IBD Stock Checkup tool. But that group ranks No. 195 out of 197 industry groups that IBD tracks. Growth stock investors should focus on leading stocks in top 40 industry groups.
Be sure to keep an eye on the overall stock market. If it turns negative, don't try to fight the general stock market direction.
To find the best stocks to buy and watch, check out IBD's Stock Lists page. More stock ideas can be found on IBD's Leaderboard, MarketSmith and SwingTrader platforms.
