Another potential earnings short-squeeze play is Netflix(NFLX), an Internet subscription service streaming television shows and movies, which is set to release its numbers on Tuesday after the market close. Wall Street analysts, on average, expect Netflix to report revenue of $904.89 million on earnings of 4 cents per share.
This company has beaten Wall Street estimates the last four quarters and is coming off a quarter where it beat estimates by 7 cents per share, after reporting a profit of 11 cents per share against a mean estimate of 4 cents per share. This company has averaged year-over-year revenue growth of 32.3% over the last four quarters.
The current short interest as a percentage of the float for Netflix is extremely high at 28.9%. That means that out of the 54.20 million shares in the tradable float, 15.57 million shares are sold short by the bears. This stock has a very high short interest and a relatively low float. Any bullish earnings news could easily setup NFLX for a monster short squeeze post-earnings.
From a technical perspective, NFLX is currently trading above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock recently soared back above its 50-day moving average with heavy volume and triggered a near-term breakout trade above $60 to $61.50 a share, and above $66.65 a share. That move is now pushing NFLX within range of triggering another major near-term breakout trade.
If you're in the bull camp on NFLX, then I would wait until after its report and look for long-biased trades if this stock can manage to break out above some near-term overhead resistance levels at $69.84 to $74.23 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 5.2 million shares. If NFLX triggers that move, then look for this stock to rip higher and re-test or possibly take out its next major overhead resistance levels at $77 to $83.10 a share, or possibly even $86.65 a share.
I would simply avoid NFLX or look for short-biased trades if after earnings this stock fails to trigger that breakout and then drops back below its 50-day moving average of $61.23 a share with high volume. If we get that move, then NFLX will setup to re-test or possibly take out its next major support level at $53.05 to $52.81 a share.
For another take on Netflix, check out "5 Big Stocks to Trade for Gains."
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