Skip to main content

Buy or Sell Netflix on Earnings? The Charts Provide a Major Clue.

Netflix is popping on its earnings report after the streaming company beat subscriber estimates. Here's how to trade it from here.

Shares of Netflix  (NFLX) - Get Free Report were trading up more than 6% at last check. The bulls let out a sigh of relief after the streaming giant reported better-than-expected earnings.

Revenue grew just 1.8% to $7.5 billion and was about in line with expectations, while earnings missed consensus estimates. 

the largest metric is subscriber growth and Netflix crushed it. The company added 7.66 million subs, easily smashing its prior guide of 4.5 million and well above Wall Street estimates calling for 4.1 million subs. 

Netflix’s new lower-priced ad tier clearly didn’t drive a spike in revenue, but it did result in strong subscriber growth.

Investors are relieved by the quarter as the best-performing FAANG stock over the ast several quarters continues to push higher.p

Now the question: Can Netflix continue to lead FAANG?

Trading Netflix Stock on Earnings

Daily chart of Netflix stock.

Daily chart of Netflix stock.

Friday’s post-earnings rally is enough to send Netflix stock to its highest level since mid-April. But it’s also triggering a key rotation.

That’s as the shares clear the December and fourth-quarter high of $332.72. That creates a lot of opportunity, but there’s also a warning laced throughout today’s price action.

That warning manifests into true concern if Netflix stock fails to hold above the $332 to $333 area. If the stock fades from here and closes back below this area, that’s not a good sign.

It may not mean that the shares will collapse, but it will be a failed rotation on what bulls were hoping would be a big catalyst.

If, however, Netflix stock does hold up above this level, it may have more upside. The $330 to $340 zone has been key, not just for the past few months but for the past year.

If it can clear this area, it opens the door back up toward $400.

Weekly chart of Netflix stock.

Weekly chart of Netflix stock.

As you can see on the weekly chart above, a push to that zone would put Netflix stock back into a key pivot area, as well as set up a test of the 200-week moving average.

From here though, it’s rather straightforward. See that Netflix stock closes above $333. If it does, clearing $340 is the next task for the bulls.