NFLX got popped all the way up to 146 last night after they reported subscriber growth better than forecast, beat their EPS by 0.02, after reporting that the Company “generated $8.3 billion in global streaming revenue (35% y/y growth) and finished the year with 93.8 million members on 19.0 million net additions vs. 17.4 million in 2015.”
NFLX Earnings Press Release: https://www.sec.gov/Archives/edgar/data/1065280/000162828017000276/nflx-123116xex991.htm
This was absurd because now the 358 PE Ratio NFLX had into the close yesterday will be more like 400 – a number 20X the average S&P 500 company (20-25). Without getting into how I can’t fathom how this $60-$70 stock is trading at $140+, here’s a few views and some projections of where NFLX should retrace to:
NFLX Weekly Chart
NFLX Daily Chart
NFLX 4HR Chart
NFLX Hourly Chart
NFLX 20 Day / 30Min Chart
NFLX 10 Day / 15Min Chart
NFLX 5 Day / 5Min Chart
Using the Fibonacci Retracements based off the low prior to the Q3 earnings up into last night’s pop to 146, the area most likely to be retraced to is the gap fill back to around the previous All Time High, 135.40. The 23.6 line would take NFLX to 134.77, $1.50 above where it closed yesterday and less than $1 below the All Time High.
To put it into better perspective, here’s the chart of the pop off the Q3 earnings and the retracement. As you will see, NFLX never actually came back to tag the 23.6 line @ 115.88, but instead tagged just above it, 117, for only a few prints and was back to pushing towards the 120s.
NFLX Retracement Last Earnings
NFLX Trade Idea
Being as how the markets got overloaded with SPY PUTS yesterday in expectation of a drop to come, I’d let the IV settle down some first, then look at either this or next Friday’s 140 PUTS, maybe even as far out as 138 PUTS, and assess whether or not the risk would be worth the reward.