Netflix Stock (NFLX) Is 35% Down After the Q1 Earnings Report

Netflix Stock (NFLX) Is 35% Down After the Q1 Earnings Report

 Published: April 26th, 2022

Netflix stock (NFLX) showed an immediate bearish pressure after the Q1 earnings release where the company lost 200K subscribers, lower than the expectation of 2.5 million new subscribers.

In the first quarter of 2022, Netflix showed earnings per share of $3.43, above the expectation of $2.89. Moreover, the revenue was slightly down to $7.87, below the expectation of $7.93. Although the earnings report was steady, the selling pressure came from the loss in the number of subscribers, which was 2.93 million additions to the previous quarter. According to Netflix, the loss in subscribers came from the Ukraine Russian war where winding down Russian membership is behind 700K subscribers. On the other hand, the competitive pressure from other streaming services is putting pressure on the company while the password-sharing facility is another reason for losing the subscribers.

Although Netflix stock moved lower by 35% after the Q1 earnings report, the revenue was steady by 10% to $7.87 million. Moreover, the company has a free cash flow of $804 billion, up from $692 billion a year ago. Its current ratio is also at 1.05, indicating that the company is able to run the business without any shortage of cash. In that case, investors should monitor how management takes actions to rebound the stock price. Let's see the future price direction from Netflix stock (NFLX) technical analysis.

Netflix Stock (NFLX) Daily Chart

Netflix Stock (NFLX) Daily Technical Analysis 26th April 2022

The massive selling pressure in Netflix stock (NFLX) made a multi-year low where the most recent support level is at 180.00. Moreover, the higher timeframe price action is still highly bearish, whereas the bullish correction is potent based on the dynamic resistance level. Meanwhile, RSI is below the 30 level while the MACD Histogram is bearish in the weekly timeframe, indicating that the selling pressure needs a strong rejection from bears before bulls can join the battle.

The above image represents the daily chart of Netflix stock (NFLX) where the price made a strong bearish gap after the Q1 earnings report and did not show any bullish daily candle. Moreover, the selling pressure is questioned by the divergence with MACD where the MACD line failed to make new lows following the price. Meanwhile, the gap between the price and dynamic 20 EMA is expanded, opening the possibility of a bullish correction.

In that case, the primary aim of this stock is to find a bullish opportunity, which is valid as long as it trades above the 180.00 key support level. However, the break below the 180.00 level with a strong bearish daily candle will negatively affect this stock that may extend the loss to the 150.00 area.

Netflix Stock (NFLX) H4 Chart

Netflix Stock (NFLX) H4 Technical Analysis 26th April 2022

According to the Ichimoku Cloud, Netflix stock is trading below the Kumo Cloud where the future cloud is exceptionally bearish. Moreover, the price made a stable position below the dynamic Kijun Sen line, while the Lagging Span is bearish.

The above image shows how the price remained corrective below the dynamic Tenkan Sen while the gap between the dynamic Tenkan Sen and Kijun Sen expanded. Meanwhile, the traders' dynamic index shows a corrective pressure by bears as the TDI line moved higher from the lower band. However, the TDI line is still below the 50 level, which is the ultimate barrier for bulls.

Based on the H4 structure, investors may experience bullish pressure toward the dynamic Kijun Sen where 250.00 to 280.00 would be a potential bearish zone from where selling pressure may come. On the other hand, a break above the dynamic Kijun Sen with an H4 close would eliminate the current structure and start a bullish pressure.

Netflix Stock (NFLX) H1 Chart

Netflix Stock (NFLX) H1 Technical Analysis 26th April 2022

In the intraday chart, NFLX is trading under extreme selling pressure; the most recent high volume level is near the current market price after making consecutive lower lows. Moreover, the dynamic 20 EMA is above the price and works as minor resistance.

The above image shows how the price trades within a bearish channel even if the MACD Histogram is bullish. In that case, any bearish rejection from the dynamic weekly VWAP would be a bearish factor for this instrument that may influence bears to test the 180.00 key support level.

Should You Try Selling Netflix Stock (NFLX)?

Based on the current multi-timeframe analysis, Netflix Stock (NFLX) has a higher possibility of extending the current bearish pressure and testing the 180.00 key support level before showing any bullish sign. In that case, any selling pressure in the lower timeframe would be a bearish opportunity in this instrument, depending on the price action.

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