• Netflix (NFLX) fell perfectly from our entry price identified on Wednesday.
  • NFLX results were mixed, but the stock recovered strongly.
  • Netflix retraced but did not make new post-earnings high.

Update: A nice call here at FXStreet on Wednesday. To recap: "The retracement to $530 can be used as an opportunity to go short with a stop above the 9 and 21-day moving averages at $535. Within two hours of us publishing this call, NFLX stock was trading at $505, a nice 3% gain in the space of two hours. The zone around $500 has a lot of volume that provides good support. It is not until we get through $480 that things could speed up again. 

Netflix announced results after the market closed on Tuesday, and they appear to be a mixed bag. Netflix was a huge beneficiary in the early stages of the pandemic as there was not a whole lot else to do but sit at home and stream content. Subscriber numbers jumped accordingly and so too did the stock price. Therefore, it was inevitable that such growth would slow once economies started to reopen, and that is exactly what has happened.

Netflix Q2 earnings

Netflix Earnings Per Share (EPS) was slightly behind analyst forecasts, coming in at $2.97 versus $3.15 forecast, but revenue was ahead coming in at $7.34 billion marginally beating the $7.32 billion estimate. Netflix said it finished Q2 2021 with 290 million paid subscriptions and added 1.5 million subscriptions or memberships in Q2 ahead of its own forecast for 1 million. 

The company also issued Q3 guidance which was ahead of previous analyst forecasts. NFLX said Q3 EPS is estimated to be $2.55 versus $2.17 forecast, sales are forecast to be $7.477 billion just behind the forecast for $7.48 billion. 

The subscriber growth was a bit of a mixed bag with US and Canada numbers coming in behind forecasts, losing 430k viewers in this region versus forecasts for a gain of 52k. The biggest growth region was Latin America. 

The comparisons were tough as Netflix had scored huge gains during the pandemic which saw the stock and subscriber numbers soar. So, maintaining that and comparing against 2020 numbers was always going to be tough. The big issue that investors are likely focusing on is guidance on subscribers with Netflix saying it aims for 3.5 million new subscribers in Q3 while Wall Street had pencilled in a growth of 5.86 million.

Netflix stock forecast

The results were met with an initial burst of disappointment as the shares dumped below $500 but quickly retraced. This can be taken as a positive as the initial probe lower was rejected and buyers defended the level. However, in my view, there is not a huge amount to be bullish on either. The continued choppiness in the share price being matched by the mixed bag of results. 

We can see by the hourly chart below just why $500 was held. Not only is it a psychological round number, which the market loves but the volume profile shows a lot of volume here so providing extra support. Volume was light from below $534 enabling the sudden sharp fall but volume picked up and provided support at $500. 

Taking a longer-term view to the 4-hour chart shows the bullish retracement but there is not enough to continue the move and rather this could be an interesting shorting opportunity. The Moving Average Convergence Divergence (MACD) has given a bearish crossover back last week and the market is now nervous after earnings. The retracement to $530 can be used as an opportunity to go short with a stop above the 9 and 21-day moving averages at $535. This is a pretty tight stop but breaking above those levels will end the bearish case as the short-term trend will have turned. The RSI and CCI gave us a bearish divergence not making new highs despite NFLX stock price doing so on July 14. 


Like this article? Help us with some feedback by answering this survey:

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content

Recommended content

Editors’ Picks

AUD/USD retreats towards 0.6900 amid cautious markets

AUD/USD retreats towards 0.6900 amid cautious markets

AUD/USD is easing towards 0.6900, fading a renewed uptick amid a cautious market mood. The US dollar is attempting a bounce, as investors rethink the impact of aggressive Fed rate hikes on growth. A dip in the Australian business confidence survey also weighs on the AUD. 


USD/JPY drops towards 135.00 amid risk-aversion

USD/JPY drops towards 135.00 amid risk-aversion

USD/JPY is heading south to test 135.00, having failed to sustain above 135.50. The pair is falling in tandem with the US Treasury yields while the return of risk-off flows underpins the USD bounce. Focus shifts to US data. 


Gold bounces off $1,820 support zone, focus on US data, Fed’s Powell

Gold bounces off $1,820 support zone, focus on US data, Fed’s Powell

Gold Price consolidates recent losses at around $1,825.00 during Tuesday’s Asian session. In doing so, the yellow metal takes clues from the market’s cautious optimism ahead of the key US consumer sentiment numbers and the much-awaited central bankers’ debate at the ECB forum.

Gold News

ApeCoin price edges near a critical level, is the uptrend genuine?

ApeCoin price edges near a critical level, is the uptrend genuine?

ApeCoin price shows compression of two Simple Moving Averages as price consolidates. APE price shows bullish re-entrance on the Volume Profile pattern, but traders should steer away from being early buyers. Invalidation of the bear trend remains at $6.15.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!