Another potential earnings short-squeeze play is Netflix ( NFLX), an Internet subscription service provider of streaming television shows and movies, which is set to release its numbers on Monday after the market close. Wall Street analysts, on average, expect Netflix to report revenue $1.10 billion on earnings of 49 cents per share.
The current short interest as a percentage of the float for Netflix is pretty high at 12.5%. That means that out of the 52.18 million shares in the tradable float, 6.96 million shares are sold short by the bears. This is a high short interest on a stock with a relatively low float. Any bullish earnings news could easily spark a monster short-squeeze for shares of NFLX post-earnings.From a technical perspective, NFLX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been trending incredibly strong over the last four months and change, with shares soaring higher from its low of $205.75 to its intraday high of $349. During that uptrend, shares of NFLX have been mostly making higher lows and higher highs, which is bullish technical price action. 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 manages to break out above its new 52-week high of $349 a share high volume. Look for volume on that move that hits near or above its three-month average action of 3.13 million shares. If that breakout triggers, then NFLX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $380 to $400 a share. I would simply avoid NFLX or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below Monday's low of $340.10 a share with high volume. If we get that move, then NFLX will set up to re-test or possibly take out its next major support levels at $320 to $310 a share. Any high-volume move below those levels will then give NFLX a chance to tag its 50-day moving average of $298.44 a share.
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