Netflix was bucking Monday's stock market downtrend as the streaming entertainment giant climbed higher after the company's robust earnings report late Thursday. Netflix stock broke out of a double-bottom base and briefly breached the 1,000 price level in heavy volume before fading.
The streaming stock is Monday's pick for IBD 50 Growth Stocks To Watch as shares show relative strength amid a weak market.
Netflix handily beat first-quarter earnings and modestly topped sales late Thursday. The U.S. stock market was closed on Good Friday.
Netflix Earnings Delight
Its first-quarter earnings came in at $6.61 per share, or a 27% increase. Revenue grew 12.5% to $10.54 billion.
"Both were ahead of our guidance due to slightly higher subscription and ad revenue and the timing of expenses," Netflix said in the company's earnings release.
Its first-quarter operating margin rose to 31.7 % vs. 28.1% a year ago.
Neflix predicted earnings-per-share of $7.03 with sales of $11.035 billion, or 15.4% growth, for the second quarter. It sees the revenue increase coming from recent price changes and continued growth in membership and advertising revenue. It forecasts second-quarter operating margin at 33.3%.
"Our revenue and profit growth outlook remains solid, with no change to our 2025 guidance forecast for revenue of $43.5-$44.5 (billion) and operating margin of 29%," the company said in a letter to shareholders with the earnings report. It predicted 2025 operating margin of 29%.
Netflix stock is also on the IBD Leaderboard watchlist.
It ranks No. 1 out of 20 stocks in the Leisure-Movies & Related group, which holds the 6th spot out of the 197 industry groups that Investor's Business Daily tracks. The group holds an A+ Relative Strength Rating.
How To Know It's Time To Sell Your Favorite Stock
Netflix Stock Hits Buy Point
The IBD 50 and Big Cap 20 stock broke out of what would normally be an early-stage double-bottom base with a 998.70 buy point, according to MarketSurge pattern recognition. But the buy point is only used during strong market environments. IBD continues to recommend 0% to 20% stock market exposure.
The stock gave back larger gains and back below the entry point. Netflix stock's relative strength line reached a 52-week high as shown by the blue dots on its charts.
Shares are above their 50-day moving average.
Institutions Favor Netflix
Its IBD Accumulation/Distribution Rating of B+ indicates fairly heavy institutional buying over the last 13 weeks.
Mutual funds have been adding shares, with 4,556 owing Netflix stock, up from 4,492 on December and 4,341 in September. Several IBD Mutual Fund Index names own Netflix stock, including Fidelity Contrafund with 3.87 million shares held in March.
It boasts a best-possible 99 IBD Composite Rating and a 98 Earnings Per Share Rating.
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