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Netflix’s stock price appears to have bottomed out as investors await the results of its ad-supported model. NFLX shares have climbed to $310, the highest level since April this year, marking an almost 90% increase from their lowest point in 2022 and giving the company a market cap of $136 billion. So, is Netflix a good stock to buy?
Netflix, a member of the FAANG group, has been making a strong comeback as investors take note of the company’s recent changes. The most notable of these is the introduction of a lower-priced subscription plan that includes advertisements.
Additionally, Netflix is cracking down on password sharing, a long-standing issue where many subscribers share their accounts with others who don’t pay. The company hopes this move will encourage more people to start paying for their own subscriptions.
Netflix’s share price has also recovered following the release of strong quarterly results. Revenue increased from $7.4 billion in 2021 to $7.92 billion in the third quarter of this year. Although its operating income dipped to $1.5 billion and net income to $1.39 billion, the company successfully reduced its long-term debt to $13.8 billion.
Another significant development is Netflix’s potential entry into the sports market, as it has reportedly placed a bid for the ATP tennis tour in an effort to expand its audience.
However, it remains too early to tell if these initiatives will succeed. For instance, the lower-priced ad-supported product could potentially cannibalize its higher-margin business. Additionally, Netflix can only show ads on a limited selection of movies and series, as it needs permission from content producers.
The daily chart indicates that Netflix’s stock has been in a bullish trend over the past few weeks. During this time, the stock has moved above the crucial support level of $251, which was the highest point since August of this year. The rally is supported by the 25-day and 50-day moving averages, while the Awesome Oscillator has moved above the neutral level.
Given these factors, Netflix’s share price is likely to continue rising, with buyers targeting the key resistance level at $350. However, a drop below $251 would invalidate the bullish outlook.