Netflix NFLX Inc (NASDAQ: NFLX) shares fell 5% on Friday after
Goldman Sachs analyst Eric Sheridan downgraded the streaming pioneer over risks
of slower consumer spending and tough competition from Amazon and Walt Disney
last week's selloff paled in comparison to the bloodbath on Wall Street today.
All three major indexes logged their fourth-straight loss, with the Dow in
particular shedding 876 points to close at its lowest level since February
2021. The S&P 500 closed in bear market territory and at its lowest level
since March 2021, while the Nasdaq fell to levels not seen since November 2020.
Netflix NFLX fell another 7.24% today. This gave Weekly Options USA members the
chance to make 76% potential profit using a PUT OPTION. (see chart below).
Netflix NFLX lost subscribers for the first time in more than a decade,
signaling trouble ahead for the industry as rising prices of food and gas left
people with little to spend on entertainment.
its services in Russia after the Ukraine invasion also took a toll on Netflix.
downgraded the stock to "sell" from "neutral" and slashed
its price target to $186 from $265, the lowest PT among analysts covering the
stock, according to data from Refinitiv.
"We have concerns around the
impact of a consumer recession as well as heightened levels of competition on
demand trends (both in the form of gross adds and churn), margin expansion, and
levels of content spend and view Netflix as a show-me story with a light
catalyst path in the next 6-12 months," Sheridan warned in the new note to clients.
brokerage also lowered its ratings on e-commerce platform eBay Inc and online
gaming firm Roblox Corp to "sell" from "neutral". Roblox
and eBay shares fell nearly 4% in afternoon trading.
is now a "show-me story", Goldman said, as it cut revenue estimates
Netflix shares down 4.6% at $184.06 in midday trading on Friday, adding on to
this year's 68% slump.
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on the outs long before April rolled in. The stock took a massive haircut in
January after its subscriber growth guidance for the first quarter came in
below Wall Street's expectations.
first-quarter report hit the news wires on April 19, and it wasn't pretty. The
soft prediction for subscriber additions turned into a negative number for the
first time since the Qwikster era in 2011. Even worse, management sees the
negative trends continuing in the second quarter, so the next quarter's
subscriber drop looks even larger.
didn't matter that Netflix also reported revenue right in line with analyst
projections while crushing analysts' bottom-line targets. Earnings of $3.53 per
share left the Street consensus far behind at $2.90 per share.
is raising subscription prices and tweaking its business operations to cut
costs and boost profits. But investors are ignoring all of that to focus on
those all-important subscriber figures. Netfix shares fell more than 37% the
next day alone.
of Netflix gained downside momentum together with other tech stocks after the
U.S. reported that Inflation Rate increased by 8.6% year-over-year in May.
Analysts expected that Inflation Rate would grow by 8.3%.
high Inflation Rate is a bearish catalyst for Netflix stock for several
reasons. First, the Fed will be forced to raise the rate aggressively in order
to curb inflation. This is bearish for tech stocks in general.
Netflix may face additional problems as consumers analyze their budgets amid
high inflation and cut “unnecessary” subscriptions.
Analyst estimates for Netflix NFLX have been moving lower after the release
of a disappointing quarterly report in April. Currently, the company is expected
to report earnings of $10.91 per share in 2022 and $11.97 per share in 2023, so
the stock is trading at 15 forward P/E.
While such valuation levels may look cheap for Netflix, traders should
keep in mind that the company’s growth is slowing down. In addition, the
situation in the economy is worse than previously expected, which could hurt
Netflix’ financial performance.
"The cost of living crisis will
have a major impact on all streaming services. Let's not forget the market is
now awash with too many streaming media services chasing too few
services," said Paolo
Pescatore, an analyst at PP Foresight.
"Expect some to pivot more
towards a yearly discounted bundle to entice users and increase loyalty."
already considering a cheaper subscription that includes advertising, following
the success of similar offerings from rivals HBO Max and Disney+.
According to the issued ratings of 38
analysts in the last year, the consensus rating for Netflix stock is Hold based
on the current 4 sell ratings, 24 hold ratings and 10 buy ratings for NFLX. The
average twelve-month price prediction for Netflix is $365.24 with a high price
target of $730.00 and a low price target of $186.00.
Netflix has a quick ratio of 1.05, a current ratio of 1.05 and a
debt-to-equity ratio of 0.83. The firm has a market cap of $81.27 billion, a
P/E ratio of 16.60, a PEG ratio of 1.00 and a beta of 1.28. Netflix has a 52
week low of $162.71 and a 52 week high of $700.99. The business’s fifty day
simple moving average is $231.96 and its 200 day simple moving average is
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