Netflix surges as its earnings highlight dominance in ‘streaming wars’.

FUNDAMENTAL OVERVIEW:

On Wednesday, Netflix (NASDAQ: NFLX) surged by 10%, fuelled by robust subscriber growth, reinforcing investor confidence in the company’s victory in the streaming wars. This success is attributed to its password-sharing crackdown and compelling content lineup.

If premarket gains persist, the streaming pioneer was poised to see its market value rise by approximately $20 billion, considering its share price of $542 before the market opened.

On Tuesday, the company reported that 13.1 million individuals subscribed to its service in the fourth quarter. This marks its most substantial growth since the onset of the pandemic and significantly surpasses the estimated 8.97 million subscribers.

The company’s stock carries a premium compared to competitors, with a trading multiple of nearly 30 times its 12-month forward earnings. In contrast, Walt Disney (NYSE: DIS) Co stands at 20.41, as per LSEG data.

The company intends to allocate up to $17 billion for content this year, following disruptions to certain productions caused by last year’s dual Hollywood strikes involving actors and writers.

The company is increasing its focus on live programming and, on Tuesday, announced a rights deal exceeding $5 billion. This deal secures exclusive streaming rights for World Wrestling (NYSE: TKO) Entertainment’s “Raw” and other content, starting January 2025.

NETFLIX TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

Netflix is currently trading within an up channel.

Netflix is positioned above all the Moving Averages (SMA).

The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Positive trend.

Immediate Resistance level: 493.13

Immediate support level: 466.12

HOW TO TRADE NETFLIX

After an initial surge, Netflix shares experienced a dip but resumed an upward swing, forming a higher high pattern. Currently hovering around a crucial resistance zone, if Netflix successfully breaks and maintains this level, further upside can be anticipated.

TRADE SUGGESTION- Stop Buy– 499.89, TAKE PROFIT AT- 544.16, SL AT- 474.37.