Netflix (NFLX, $313.34) shares decline, following Wells Fargo downgrade on cost concerns
Shares of Netflix were falling Monday, following a rating downgrade on the stock.
Wells Fargo Securities lowered its rating on the video streaming company's stock to under-perform. It also slashed its price target on the shares to $265 a share, from $308.
Wells Fargo analyst Steven Cahall suggested that Netflix could be incurring a steep cost in its fight for market share in the cut-throat video streaming industry. The company could be overpaying for subscribers, according to the analyst. Cahall indicated that Netflix may be able to meet the Street's expectations for subscriber growth, but the massive spending towards chasing the growth is likely to pressurize the company's cash flow. Netflix's cumulative free-cash flow might fall short of analyst expectations by as much as $18 billion between 2019 and 2025, according to Cahall . Netflix won't be able to generate positive earnings on a per subscriber basis until 2022, per Cahall's analysis.
Competition in the streaming business is getting only getting hotter. Walt Disney recently launched its own streaming service, Disney+. Apple is also making its presence felt in the market with its Apple TV+.
NFLX in -1.54% downward trend, declining for three consecutive days on October 16, 2024
Moving lower for three straight days is viewed as a bearish sign. Keep an eye on this stock for future declines. Considering data from situations where NFLX declined for three days, in of 287 cases, the price declined further within the following month. The odds of a continued downward trend are .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 15, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on NFLX as a result. In of 82 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for NFLX turned negative on October 14, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 49 similar instances when the indicator turned negative. In of the 49 cases the stock turned lower in the days that followed. This puts the odds of success at .
NFLX broke above its upper Bollinger Band on September 24, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Stochastic Oscillator is in the oversold zone. Keep an eye out for a move up in the foreseeable future.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where NFLX advanced for three days, in of 317 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 316 cases where NFLX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. NFLX’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 86, placing this stock slightly better than average.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (12.920) is normal, around the industry mean (5.952). P/E Ratio (51.065) is within average values for comparable stocks, (90.982). Projected Growth (PEG Ratio) (1.889) is also within normal values, averaging (2.987). Dividend Yield (0.000) settles around the average of (0.039) among similar stocks. P/S Ratio (8.190) is also within normal values, averaging (30.667).
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a provider of online movie rental subscription services
Industry MoviesEntertainment