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Netflix’s stock price forecast, which anticipates a recovery, seems to have gained some traction based on recent price movements. The stock opened today with a 2.29% increase as of writing, as bullish investors try to build on Thursday’s gains. Thursday saw a 4.77% rise, driven by bargain hunters looking to buy shares of underperforming FAANG stocks.
However, bearish sentiment still lingers due to the ongoing loss of Netflix’s subscriber base, especially as rival Disney+ continues to grow. Recently, Disney+ reported a significant increase in its subscriber numbers, adding pressure on Netflix.
In response to slowing growth in its streaming service subscriptions, Netflix is accelerating its plans to introduce advertising into its content. This change could be implemented as early as December 2022, much sooner than the original plan to roll out a lower-priced, ad-supported subscription within the next two years.
The introduction of ads and a crackdown on password sharing are strategies Netflix is using to counteract the financial impact of losing 200,000 paying subscribers in Q1 2022, the first such loss in over a decade.
Netflix’s stock price forecast is also facing challenges from a lawsuit filed by shareholders, who claim the company withheld information about the decline in its subscriber base before the subsequent drop in its share price.
On the technical side, the recent bounce from the 164.62 support level (the low from August 17, 2017) follows the completion of a bearish flag on the daily chart. For the stock to move towards the 189.91 resistance level (the highs from July 2, 2017, and September 21, 2017), today’s candle must close above the highs of the last three trading sessions. Breaking this resistance could pave the way towards the 218.46 barrier (the high from April 25, 2022).
If the bulls manage to break through 218.46, the next targets are 252.33 and 275.27, levels that served as lows on April 5, 2018, and October 31, 2018, respectively. Successfully reaching the 331.16 resistance (the lows from March 14 and April 18) would close the existing downside gap.
On the other hand, if the 164.62 support level breaks, it could lead to a decline towards the 147.01 mark, with 129.84 (the low from January 12, 2017) as the next potential target. Further support exists at 111.31, formed by the high from April 13, 2016, and the low from November 14, 2016.