Netflix Stock: How To Trade Around Earnings (Technical Analysis)

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Over the past six months, Netflix stock  (NFLX) – Get Free Report has climbed approximately 90% and has continued to perform well in January. The company is expected to release its Q4 2022 results after the market closes on Thursday.

In addition to subscriber data, the stock is likely to react to comments about the progress of the advertising component and new initiatives to decrease password sharing.

With the crackdown on password sharing, the rise of advertising, and the expected decline in competitor spending, NFLX will probably be a stock to watch.

Figure 1: Netflix Stock: How To Trade Around Earnings (Technical Analysis)

Figure 1: Netflix Stock: How To Trade Around Earnings (Technical Analysis)

Wired

NFLX Technical Analysis: Watch The Gap

On the technical analysis side, the price has filled the gap recorded in April after disappointing on earnings day. It still has another gap to fill after the missed earnings in January. If this occurs, the stock will likely move toward $508, but we are not there yet.

Figure 2: NFLX chart.

Figure 2: NFLX chart.

TradingView

We are still facing strong resistance at $332, although the trend is bullish (higher highs and higher lows), and we are above the 200-day moving average on the daily chart.

However, the weekly trend is bearish, and we are below the 200-day moving average on the weekly chart. Thursday’s earnings will set the tone for the stock in the mid-term.

If we close above $332 daily, we will likely target $416 next before filling the gap at $508. But if the earnings or forward guidance are negative, we will probably go back to test the trend line (black line on the chart) and trade closer to the next support at $255.

Figure 3: NFLX chart.

Figure 3: NFLX chart.

TradingView

Netflix’s Earnings Week Could Be Jolty

Momentum is positive, as the overall market is bullish, inflation is slowing down, and the Federal Reserve’s tone is not as hawkish as before. However, Netflix’s stock price will likely be tied to investor interpretation of earnings on Thursday, and we might see a big move post-market.

The stock could perform very well in the short term and fill the gap at $508, which is a 50% return. Alternatively, if the earnings are negative, the stock price might retest the $256 level, which is a 23% drop from the current level.

It’s important to note that historically, the stock price has had violent moves after earnings, so caution should be taken before investing. The share price could drop up to 30% in one day as it did in April.

Figure 4: NFLX earnings-related price change.

Figure 4: NFLX earnings-related price change.

TipRanks

Trading NFLX: Takeaways

In summary, Netflix’s stock has been on a roll in the past six months, showing no signs of slowing down. As the company gears up to release its Q4 2022 results on Thursday, investors eagerly wait to see how the numbers will stack up.

The technical analysis of the stock presents a mixed picture, with strong resistance at $332. But if it manages to break through, it could see a potential return of 50%.

However, it’s essential to remember that the stock has a history of volatility post-earnings. As a seasoned stock market participant, I advise investors to exercise caution before making any move.

For risk-takers, buying the stock now could be a huge opportunity if the earnings are positive. I prefer to wait for the print to have a clearer picture of what might happen next.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the MavenFlix)