- Summary:
- Netflix stock price seems to have hit a bottom as investors wait for results of its ad-free model. NFLX shares rose to $310
Netflix stock price seems to have hit a bottom as investors wait for results of its ad-free model. NFLX shares rose to $310, the highest level since April this year. It has risen by almost 90% from its lowest level this year, giving it a market cap of $136 billion. So, is Netflix a good stock to buy?
Netflix shares rebound
Netflix, one of the FAANG stocks, has been in a strong comeback as investors reflect on the changes the company is implementing. The most significant one is the introduction of a cheaper subscription package that is supported by advertisements.
It is also cracking down on password sharing, a major challenge it has faced for years. The issue is that many subscribers share their accounts with other people who don’t pay. As a result, the company hopes to encourage these people to start paying.
Meanwhile, the Netflix share price has recovered after the company published strong results. Its revenue rose from $7.4 billion in 2021 to $7.92 billion in the third quarter of this year. Its operating income slipped to $1.5 billion while its net income slipped to $1.39 billion. Netflix also managed to reduce its long-term debt to $13.8 billion.
Another important Netflix news is that the company is considering getting into the sports business. It has placed a bid for ATP tennis tour as it seeks to grow its audience.
Still, it is too early to determine whether all these initiatives will be successful. For its ad business, the lower-priced product could cannibalize its higher-margin business. Also, the company will show ads on a small collection of movies and series since it needs authority from content producers.
Netflix stock price forecast
The daily chart shows that the NFLX share price has been in a bullish trend in the past few weeks. In this period, it has managed to move above the important support level at $251, which was the highest point since August of this year. The rally is being supported by the 25-day and 50-day moving averages while the Awesome Oscillator moved above the neutral level.
Therefore, the Netflix share price will likely continue rising as buyers target the key resistance level at $350. A drop below $251 will invalidate the bullish view.
