Netflix is trading at around $332.46 a share. In an uptrend since July 2022, will the bulls remain in control or will it struggle to regain 2022's losses?
Overview
Netflix, Inc. is an American production business and subscription-based over-the-top streaming service with headquarters in Los Gatos, California. 222 million people were Netflix members as of September 2022, with 73.3 million of those people living in the United States and Canada, 73.0 million in Europe, the Middle East, and Africa, 39.6 million in Latin America, and 34.8 million in the Asia-Pacific area. Except for Mainland China, Syria, North Korea, and Russia, it is accessible everywhere. In addition to being a member of the Motion Picture Association, Netflix has been a major player in the distribution of independent movies.
Financials
In the financial year of 2021, Netflix reported $29.7bn in revenue and $12.4bn in gross profit. Its net income after operating expenses and tax came in at $5.1bn, which was an 85% increase YoY. Additionally, as EBITDA grew by over $3bn, the earnings per share for 2021 soared to $11.55 from $6.26 in 2020. Taking a look at the balance sheet of the streaming company, total assets were reported at $44.5bn and total liabilities saw little change, just under $29bn. Netflix still holds a substantial cash-on-hand pile of over $6bn. The company finished the year with $15.8bn in equity, up 43% from the previous year.
Technicals
From a technical outlook, Netflix shares are trading at around $332.46 a share. On the chart, support levels sit firmly below along the added trendlines with levels at $329.31 then at $295.21 (corresponds with the green trendline), then at $273.47. A break below $273.47 could see its price slide towards the $265-$270 mark, which is where the next major support sits along the orange trendline. Towards the upside, resistance sits at $335.05 then at $336.60. A break above these points may see the price soar towards $350-$360 a share. Looking at the indicators, MACD is currently positive and so is RSI as it reads 67.
Summary
To summarise, the financials of Netflix are strong with great progress year-on-year. Yes, the covid period may have boosted its business operations slightly as naturally for a business like this one, it was a good opportunity to generate more revenue and profits. Although, we did see the stock plummet in 2022, especially in Q1 and Q2. But looking at the technicals, it has made significant progress since July 2022 and has been on a ride ever since. In addition, at present, the indicators suggest a bullish outlook. Important to note, Netflix is reporting its quarterly earnings on Thursday 19th, which could either cloud or clear the outlook for the first 2 quarters of 2023. Finally, Netflix is also set to impose the ‘IP Address’ policy, where the account sharing option that is currently used by millions, will be no longer present and each household will require a Netflix account as it will be based on IP address rather than payment package.
