Netflix is the IBD Stock Of The Day as it approaches a buy point after the internet television network's first-quarter earnings report. NFLX stock broke a short downtrend on Monday.
In morning trades on the stock market today, NFLX stock popped above its 50-day moving average line. That positive action created a buying opportunity for aggressive investors.
Netflix shares now are nearing a buy point of 349.90 out of a cup-with-handle base, according to IBD MarketSmith charts. In recent trades, NFLX stock gained 2.6% to close at 331.21.
Also, IBD added NFLX stock to its SwingTrader list on Monday.
NFLX Stock Rebounds From Disappointing Report
Late on April 18, Netflix delivered a mixed first-quarter earnings report. The streaming video leader missed estimates for new subscribers and revenue but its earnings topped views. Also, its outlook for the second quarter was below Wall Street's targets. NFLX stock dropped 3.2% in the next trading session.
The Los Gatos, Calif.-based company added 1.75 million subscribers in the March quarter vs. forecasts for 2.2 million. It ended the first quarter with 232.5 million total subscribers worldwide.
Netflix earned $2.88 a share, down 18% year over year, on sales of $8.16 billion, up 4% in the first quarter. Analysts expected Netflix to earn $2.86 a share on sales of $8.18 billion.
For the second quarter, Netflix predicts earnings of $2.84 a share, down 11%, on sales of $8.24 billion, up 3%. But Wall Street earlier projected earnings of $3.07 a share on sales of $8.47 billion for the second quarter.
Analysts Divided On Netflix Stock
On Wall Street, Netflix is a battleground stock with bulls and bears debating the company's prospects.
Netflix bulls point to the company's improving free cash flow. The company raised its outlook for 2023 free cash flow to at least $3.5 billion, vs. its prior outlook for at least $3 billion. In 2022, it generated $1.6 billion in free cash flow. Netflix also has guided to improved profitability.
Netflix bears see the company facing growth headwinds amid heightened competition.
"Although Netflix continues to release compelling content and is ramping up new initiatives to better monetize its platform, the industry remains competitive," Monness Crespi Hardt analyst Brian White said in a recent note to clients. "We believe the darkest days of this downturn are ahead of us."
White rates NFLX stock as neutral.
NFLX stock ranks second out of 21 stocks in IBD's Leisure-Movies & Related industry group, according to IBD Stock Checkup. Netflix has an IBD Composite Rating of 88 out of 99.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
