It’s not uncommon to see a stock rally ahead of earnings, with a bit of pre-earnings momentum and excitement driving shares higher. That’s not the case with Netflix, though.
Of its FAANG peers, Netflix is the worst-performing stock of the group so far this year, down 6.87%. Its decline only slightly nudges out Facebook (FB) - Get Meta Platforms Inc. Report, which has fallen 6.8%.
Netflix is also the worst-performing member of the group over the last six months.
TheStreet will be live blogging Netflix's fourth-quarter earnings after the close Jan. 19. Please check our home page then for more details.
Overall though, the group has also struggled, as none of the FAANG components are in positive territory this year. Alphabet (GOOGL) - Get Alphabet Inc. Report is the closest, down just 80 basis points.
That’s why investors will be focused on Netflix when it’s scheduled to report its fourth-quarter earnings after the closing bell Tuesday.
A positive reaction could give a boost to the group. A disappointing reaction could also be what pushes these names lower, too.
Netflix has been a choppy ride lately, with plenty of false rotations and miniature breakouts.
While investors can sometimes get bogged down on the day-to-day action, the longer-term view is obvious: Netflix stock is range bound.
Shares have been trapped between $470 and $550 since July. The top end of the range has an additional layer of resistance, up at $575.
As Netflix chops around its key moving averages and near the middle of its range, it’s not giving us much direction ahead of earnings. Therefore, we will have to wait until after the report.
On the downside look for a dip to the 200-day moving average, which hasn’t been tested since March. If this level fails as support, bulls may get a low-risk buying opportunity near $468, which is range support.
Below that and investors have to worry about a larger breakdown.
On the upside, let’s see if Netflix can reclaim its 21-day moving average. Above this mark has generally boded well for bulls, even amid its range-bound trading.
Above this key moving average puts this month’s high in play near $540, along with the December high at $545.50. If Netflix can clear $550, it can retest $575 resistance, opening the door to $600-plus it can clear that.