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Netflix’s stock price surged by over 10% on Tuesday evening following the release of strong quarterly earnings. NFLX shares climbed to $273, the highest level since April this year, marking a 73% increase from its lowest point this year and making it one of the top performers among FAANG stocks.
Netflix’s share price has seen a significant recovery in recent months after hitting its lowest levels in years. This rebound is largely due to the company’s plans to introduce an ad-supported version of its service.
Analysts are optimistic that this new model will help Netflix attract a broader audience and increase ad revenue in the coming quarters. However, there is some concern that this approach could lower its average revenue per user (ARPU), as more subscribers might opt for the cheaper ad-supported version.
The stock’s rise continued after the company reported surprisingly strong quarterly numbers. Netflix added 2.4 million new subscribers in the third quarter, a notable improvement after losing users in the previous two consecutive quarters. However, this figure was still lower than the 4.4 million subscribers it gained in the same quarter of 2021.
In addition to the ad-supported version, analysts are also focused on Netflix’s efforts to crack down on password sharing. They believe that addressing this issue could lead to higher subscriber conversions. During the quarter, Netflix’s revenue grew by 5.9% to $7.9 billion, while net profit dropped to $1.4 billion, and its operating margin decreased to 19.3%.
So, is Netflix a good stock to buy? From a fundamental perspective, Netflix appears to be a strong buy, especially after its recent recovery. The stock is expected to continue rising as investors anticipate the launch of the ad-supported model.
The daily chart shows that NFLX shares continued to climb following the company’s strong earnings report. The stock broke above the key resistance level of $253, which was the highest point on August 15, and has moved above both the 25-day and 50-day moving averages. It has also reached the 23.6% Fibonacci Retracement level, with the Relative Strength Index (RSI) moving above the neutral zone.
Given these indicators, Netflix’s stock price is likely to continue rising, with bulls targeting the next key resistance level at $300. However, a drop below the support level at $250 would invalidate this bullish outlook.