A smart entry point for long-term investors? – Magic Post

Netflix today

$837.69 -37.31 (-4.26%)

As of 10/01/2025 at 04:00 PM ET

52 week range

$475.26

▼

$941.75

P/E ratio

47.41

Price target

$824.00

Netflix Nasdaq:NFLX It has revolutionized how the world consumes entertainment. However, Netflix stock has recently seen a pullback from its all-time high of $941.75, which was reached on December 11, 2024. The stock is currently trading around $875.00, which represents a decline of 1.83% year to date. However, this decline comes after a fantastic year in which the stock rose more than 81%.

Investors are left to wonder whether the decline is a sign of trouble or a golden opportunity to buy into a company with a proven track record and a bold new strategy. A closer look at technical indicators, analyst sentiment, and Netflix’s strategic initiatives suggest that the current decline could actually represent a buying opportunity for those with a long-term perspective.

Technical signals indicate a possible bounce

Technical analysis offers some interesting insights into Netflix stock’s current trajectory. One of the main indicators is the 50-day moving average, which represents the average closing price of a stock over the last 50 trading days. Netflix stock is currently approaching its 50-day moving average, which is a potentially important development. When examining past performance, it is worth noting that after following a similar approach to this moving average after a period of trading above it, Netflix stock has historically shown a tendency to rebound. In fact, data going back to the last few years reveals that such an event has resulted in a positive return after one month, 63% of the time, with an average gain of 4.6%. This pattern suggests that the current pullback may be a temporary pullback before a potential rebound occurs.

Further supporting this bullish outlook is the observed activity in the options market. The 10-day call/put volume ratio, which measures the ratio of put options (bets that a stock will fall) to call options (bets that a stock will rise), is currently at 1.11 across the major options exchanges. This ratio is higher than 97% of last year’s readings, indicating a much higher than usual level of bearish sentiment among options traders. Often, when pessimism reaches such high levels, it can be a contrarian indicator. This suggests that negative sentiment may already be factored into Netflix’s stock price, which could leave room for an upside move if the company’s fundamentals remain strong. In addition, current volatility expectations, as reflected in options pricing, are relatively low. This makes options strategies more attractive to those looking to capitalize on a potential recovery.

Analysts remain optimistic despite the recent decline

Despite the recent decline in stock prices, many in the Netflix analyst community remain optimistic about Netflix’s future. The consensus rating on the stock is Moderate Buy, with an average price target of $824.30. While this target is slightly lower than the current trading price, it is important to note that several analysts have recently upgraded their ratings and increased their price targets.

It is worth noting that Pivotal Research has set a price target for the Street high of $1,100.00, reflecting a strong belief in Netflix’s long-term growth potential. Furthermore, 17 out of 31 analysts currently rate the stock as a Hold or worse, suggesting that there is ample room for upgrades if the company continues to successfully execute on its strategic initiatives. These promotions and revised price targets often follow positive developments, such as the successful launch of NFL games on the platform.

A closer look at the basics

Netflix’s financial performance provides a solid foundation for its future growth. Netflix’s third-quarter fiscal 2024 earnings report (Q3FY24) showed earnings per share (EPS) of $5.40, beating analysts’ consensus estimates of $5.09. Revenue for the quarter came in at $9.82 billion, also beating expectations. For all of 2024, Netflix expects revenue growth of 14-15% and increased its operating margin forecast to 26%, up from previous guidance of 25%. This strong financial performance demonstrates the company’s ability to generate significant profits and manage costs effectively. Analysts expect earnings to grow by 19.46% next year.

Content remains king

Live sports streaming on Netflix has found early success with NFL Christmas Day games and “Monday Night Raw” on WWE. These NFL games attracted an average of more than 30 million global viewers, becoming the most broadcast in U.S. history. “Monday Night Raw” also attracted 4.9 million viewers, surpassing recent viewership.

Netflix’s extensive content library and commitment to original programming remain its core strengths. Shows like “Squid Game” and “Heeramandi” have been global hits, earning the company 107 Primetime Emmy Award nominations. Netflix is ​​also testing a new homepage design and has a strong lineup of upcoming releases.

Is there a calculated risk worth considering?

The recent decline in Netflix shares, while worrying some, represents a compelling opportunity for investors with a long-term horizon. The company’s move into live sports has proven successful, attracting record viewership and demonstrating Netflix’s ability to execute on this new front. This, combined with a strong content strategy that continues to deliver critical acclaim and commercial success, solidifies the company’s position as a global leader in entertainment.

Netflix’s strong fundamentals, including healthy revenue growth, expanding margins and a growing subscriber base, indicate that the company is well positioned for continued expansion despite fierce competition in the streaming sector and significant costs associated with the rights to broadcast live sporting events and produce original content. Furthermore, technical indicators, coupled with the potential for continued analyst upgrades and the inherent value of its growing advertising business, provide a bullish outlook for the stock’s recovery. Investors considering taking a position in Netflix should weigh the risks carefully. However, the current decline may represent a strategic entry point for a company that continues to redefine the future of entertainment.

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