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Netflix (NASDAQ: NFLX) has had an impressive performance in 2023, emerging as one of the year’s best-performing tech stocks. However, after a strong rally in the first half of the year, the stock has experienced a significant pullback following its Q2 earnings report.
On Thursday, U.S. tech stocks saw a major sell-off after months of gains. The Nasdaq Composite dropped by 2.1%, marking its biggest loss since March 2023. This decline was largely driven by negative price movements in Tesla and Netflix stocks.
U.S. tech stocks had been on a strong uptrend since their Q1 earnings, with companies like Netflix, Tesla, NVIDIA, Apple, and Meta leading the charge. However, the Q2 results from Netflix and Tesla were less favorable, prompting investors to take profits after the earnings calls.
Netflix not only missed sales estimates but also provided lower-than-expected guidance for Q3 2023. This led to a significant sell-off, with the stock price plunging by 8.41%. Tesla’s earnings report, released on the same day, further fueled the selling pressure.
The chart for NASDAQ: NFLX shows that the stock had faced strong resistance around the $400 level, which it managed to break through. For the bullish trend to continue, this level now needs to act as support. However, the RSI and MFI indicators are overbought and showing bearish divergences, signaling potential downside risks.
As long as Netflix maintains its position above the $400 level, the outlook remains bullish. However, if the stock falls below this level, it could lead to a sharp sell-off, making $400 a critical point for many traders.
In the meantime, I’ll continue to share updated forecasts for Netflix and my personal trades on Twitter, where you’re welcome to follow along.