Netflix reported second-quarter earnings of 60 cents per share, coming in just ahead of analysts' estimates by 4 cents per share. The bottom-line results were also a 30% decline year-over-year. Revenue surged 26% to $4.923 billion and was largely in-line with analysts expectations.
So why the punishing drop?
Netflix reported subscriber growth that missed the mark. U.S. subscribers declined by 126,000, logging Netflix's first quarterly decline in eight years and missing expectations of 300,000 additions. Internationally, it did add more than 2.8 million customers, but that was well short of analysts' expectations for 4.8 million new additions.
Third-quarter revenue and earnings guidance was roughly in-line and management expects to add 7 million new subscribers. Still, investors don't seem to care. Coming up short in what was a lackluster quarter is weighing on Netflix stock on Thursday.
Surprisingly, FANG stocks traded pretty well despite the report, with Facebook (FB - Get Report) , Amazon (AMZN - Get Report) and Alphabet (GOOG - Get Report) (GOOGL - Get Report) all holding within 1% of breakeven.
Trading Netflix Stock
Netflix stock had been trading in a ~$40 range for most of this year, between $340 and $380. Buyers would scoop it up near range support and the 200-day moving average, and flip it for a profit near $380.
The stock backed off range resistance earlier this month and pulled back to the 50-day. After many months of sideways consolidation, this pullback surely drew in some bulls. They're hurting on Thursday now, with the stock gapping down well below range support.
So what now?
Netflix stock is breaking through various support levels, the closest of which is the 38.2% retracement for the one-year range at $327.37. If the stock can reclaim this level and take out Thursday's highs near $330, perhaps it can put together a rally up to the 200-day moving and prior range support at $340.
Should it continue lower, look to see how it handles the 50% retracement near $309. Below that and the 61.8% retracement at $290.66 comes into play.
Short of Netflix reclaiming some upside levels, the charts do not look particularly promising. If it does decline down toward $290 -- which, keep in mind is still $30 per share from here -- it may run into a long-term uptrend support line, about where the 61.8% retracement comes into play.
If the stock can't hold this level, it may very well fall into no man's land for a while.