While Magnificent Seven stocks Nvidia and Apple look to launch or expand new breakouts, Netflix has streamed into a fresh buy zone of its own. With Wall Street focused on Nvidia's earnings, Netflix stock has just zoomed past a 639 buy point.
Although not included among the Magnificent Seven, Netflix earns a spot on both the IBD 50 and IBD Big Cap 20, alongside Mag 7 giants Nvidia and Alphabet. Plus, Netflix and Google stock have both secured placement on the IBD Breakout Stocks Index, which gets updated weekly.
The video streamer did not make this month's list of new buys by the best mutual funds, but an impressive 184 funds with an A+ rating from IBD hold Netflix stock. In a further sign of institutional demand, the stock sports a B Accumulation/Distribution Rating and seven consecutive quarters of rising fund ownership.
Tying Nvidia with the highest-possible 99 Composite Rating, Netflix tops the Leisure-Movies & Retailer industry group. Peers include Cinemark, Lions Gate, IMAX and Roku.
See Who Joins Netflix On The IBD Breakout Stocks Index
Netflix Shakes Off Q1 Earnings Hit
Shares of Netfix took a hit after the company reported quarterly numbers on April 18. The global entertainment powerhouse with members in over 190 countries crushed Q1 targets but missed views with its sales outlook.
Netflix added 9.33 million subscribers in the March quarter, flying past consensus estimates of 5.48 million new subscribers. It ended the first quarter with 269.6 million total subscribers around the globe.
Earnings rose 83% over the prior-year quarter to $5.28 a share. For its next report in July, Wall Street forecasts a 39% EPS increase to $4.81 per share. For the full year, Netflix is expected to deliver 55% earnings growth to $18.65 a share, followed by a 21% gain in 2025.
Netflix Stock Streams Higher. Can It Continue?
Since bottoming out in May of 2022, Netflix stock has been on a tear, albeit not an uninterrupted one.
From its 2022 low, Netflix skyrocketed more than 292% before retreating on its Q1 earnings report. But the stock shook off that most recent drop to quickly retake its 10-week moving average earlier this month.
After completing its cup base with a 639 buy point, Netflix stock has kept its upward momentum going, launching a new breakout this week. Shares of NFLX eased lower Wednesday but remain in buy range.
Having made such a dramatic climb over the last two years, the latest formation for Netflix is, not surprisingly, a late-stage base, which entails more risk. And how Nvidia reports and Wall Street reacts after today's close will impact the broad market, particularly tech stocks.
But strong institutional demand, a sharply rising relative strength line and positive forecasts going forward could mean Netflix stock has more room to run. Nonetheless, late-stage bases should be approached with caution, especially for investors looking to initiate a new position.
As Netflix stock builds on its already impressive run, Nvidia stock is in a buy zone from a 922.20 handle entry. It is also moving closer to a 974 alternative buy point as Wall Street begins to digest Nvidia's latest earnings report.
After reporting on May 2, Apple gapped up in heavy volume to retake its 200-day line. The iPhone maker then held support at that line as it continues to craft a first-stage double bottom with a 196.38 entry.
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
