Chart of the Day: Netflix Continues to ‘Stream’ Lower
The stock is having trouble attracting buyers, but soon will be cheap enough to be compelling.
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While we like the prospects for Netflix (NFLX) going forward, the reality is they are challenged by different areas of media for customer eyeballs. The company continues to pump out great content for viewers and that is extremely important, yet other distractions like TikTok, gaming and shorts on YouTube/Meta take eyeballs away from Netflix.
The growth trajectory of recent years has stabilized but with such a big targeted audience these other “distractions” may take dead aim at Netflix’ coveted viewers. The fickle nature of the consumer, switching off/on at a moments notice could be the deciding factor here for Netflix moving higher or lower.
The chart below shows investor hesitancy. We go back to February when there was some excitement over the potential purchase of Warner Bros. Discovery, but the company backed away and took their breakup fee and walked off.
Many thought that was a good decision for Netflix, but since then the stock has been mired in a tough downtrend. Lower highs, lower lows is our textbook definition of a downtrend. Money flow remains negative; not many big funds are scooping up shares.
We are waiting for the stock to just stop going down, to move sideways for a time before buyers are more comfortable getting on board. The candles are purple, representing full bearish on the GoNoGo composite of indicators.
On this recent dip, we added some shares as the price looked rather compelling. We’ll continue to wait a bit longer as well, perhaps rounding out to position at even better prices.
There is a gap to fill down at $78, so that might be the spot to start picking at more Netflix. We like Netflix in TheStreet Pro Portfolio and rate it a Two, or “stockpile on pullbacks.”
At the time of publication, TheStreet Pro Portfolio was long NFLX.
