Netflix Stock Price Forecast: Is NFLX a Good Buy After Earnings

Summary:
• The Netflix stock price popped by more than 10% on Tuesday evening as investors reacted to the strong quarterly earnings. What next to NFLX?

The Netflix stock price popped by more than 10% on Tuesday evening as investors reacted to the strong quarterly earnings. NFLX shares jumped to a high of $273, which was the highest level since April this year. It has surged by more than 73% from the lowest level this year, making it one of the best performers among FAANG stocks. 

Is Netflix a good investment?

Netflix share price has made a strong recovery in the past few months after plunging to the lowest level in years. This recovery is mostly because of the company’s plans to introduce an ad version of its service. 

Analysts believe that the company will be able to attract a wider audience and more ad dollars in the coming quarters. Still, there is a likelihood that this model will reduce its ARPU since more users will prefer the cheaper version. 

The NFLX stock price continued rising after the surprising quarterly numbers. According to its report, Netflix added 2.4 million new subscribers in the third quarter. That was an impressive performance since it lost users in the previous two straight quarter.  This figure was much lower than the 4.4 million that it added in the same quarter in 2021.

In addition to launching an ad-supported version, analysts are focusing on the company’s crackdown of password sharing. They believe that a crackdown of this approach will lead to higher conversion. Netflix revenue rose by 5.9% to $7.9 billion in the quarter while net profit fell to $1.4 billion. Its operating margin fell to 19.3%.

So, is Netflix a good stock to buy? From a fundamental perspective, Netflix seems like it is a good buy now that it has made a strong recovery. Also, it will likely continue rising as investors wait for the launch of the ad-supported model.

Netflix stock price forecast

The daily chart shows that the NFLX share price continued rising after the company’s strong results. As it rose, it moved above the important resistance level at $253, which was the highest level on August 15. It has jumped above the 25-day and 50-day moving averages. The stock rose to the 23.6% Fibonacci Retracement level while the Relative Strength Index (RSI) has moved above the neutral level.

Therefore, the Netflix stock price will likely continue rising as bulls target the next key resistance level at $300. A drop below the support at $250 will invalidate the bullish view.