Netflix, Inc. (NFLX) is a provider or internet television network with 57 million streaming members in over 50 countries watching more than two billion hours of TV shows and movies per month. The stock is currently trading around $98.51 at the lower end of its 52 week range of $97.90-$100.75. The stock has been outperforming the market this year rallying a whopping 101.37% year to date. NFLX is scheduled to report earnings after the closing bell today, and the stock is bearish today falling by $1.86 or 1.85% on the session ahead of the close.

Over the past 12 quarters NFLX has rallied on earnings day 6 times with an average move of 17.74%. The stock appears bullish on a chart going into the release having traded above or in the Ichimoku Cloud for the past few months since early March on the daily bars. Over the past 12 quarters NFLX has rallied from earnings to the nearest options expiration 6 times with an average move of 20.06%. The stock looks as if it could continue today’s trend and lower in today’s session. Investors typically see a weaker Q2 domestic subscriber growth due to warm weather in the Northern Hemisphere encouraging people to go outside and watch less TV. Netflix warned the subscribers during Q2 is likely to decline year after year. The company has watched the domestic streaming contribution margin skyrocket over the past year due to slowing content cost growth meaning greater profit for Netflix.

The options market is currently implying a move of around $4.45 or 4.5% in NFLX by this Friday’s close giving us targets of $94.06 and $102.96.

Andrew Keene

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