Netflix stock is offering investors a way to tap into both consumer spending and technology trends in the market. The stock's success is not only because of its core growth in streaming, but its push into arenas like sports, live content and games.
The fundamental case for Netflix stock still remains strong, with the streaming service handily beating Q3 expectations in October. Most notably, Netflix notched an additional 5.1 million subscribers vs. the 4 million expected by analysts. Shares of Netflix saw an orderly pullback ahead of that earnings result, with shares briefly touching the 50-day moving average before surging on results.
Among its peers, Netflix is one of the few streaming services that has managed to become profitable, netting earnings of $5.12 per share on $9.77 billion in sales in Q3.
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Investors are now looking ahead to Netflix stock's Q4 results, due out on Jan. 21. Most notably, those earnings will be the last quarter in which Netflix will report subscriber numbers. The company says its shift to focusing on revenue and operating margin will better reflect its growth in other areas like advertising, live content and games.
What's New In Netflix Stock
But newness is the key to any growthy investment, something Netflix stock is leaning into with its forays into live content, sports, and mobile gaming. "I think that's a really interesting story here, and I love the setup to boot," Alissa Coram, executive editor, multimedia at Investor's Business Daily tells IBD's "Investing with IBD" podcast. She calls Netflix a stellar story as it heads into its Q4 earnings.
The streaming giant sought to bolster its foothold in sports during this quarter, hosting two back-to-back NFL games on Christmas Day and hosting a boxing match between Jake Paul and Mike Tyson in November.
The two tentpole events also represented another big move for the streaming service: its move into livestreaming. The Paul vs. Tyson boxing match was marred by technical difficulties due to the number of viewers. This overloaded Netflix's servers, which were more accustomed to serving up prerecorded content that can be more evenly distributed throughout its server network.
Netflix Stock Slips Ahead Of Earnings
Investors are set to look for upside in Netflix stock as the company gets ready to announce Q4 earnings. Shares have been drifting lower from record highs over the past few weeks, approaching the 50-day moving average. "I want to see a bounce," Coram said.
A bounce off the 50-day/10-week line could offer a buying opportunity. Netflix stock also is on track to have a flat base after Jan. 10, with a 941.75 buy point.
Netflix stock has a perfect Composite Rating of 99 and is ranked No. 1 in the Leisure-Movies And Related industry group according to IBD Research.
Tap here to learn how to find outperformance with IBD's Ali Coram.
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