Netflix Stock News: NFLX could react poorly this week to #CancelNetflix hashtag, inflation reading

• Netflix expanded its password sharing crackdown last week.
• NFLX stock closed down 4.2% on Friday.
• Subscribers in Canada and Spain are complaining about new rules.
• Market focused on Tuesday CPI release.

Netflix (NFLX) stock is doing better in Monday's premarket after last week's washout, but new storm clouds are emerging on social media where the #CancelNetflix hashtag is once again gaining ground due to last week's crackdown on password sharing in certain international jurisdictions. Additionally, some traders are now expecting the January Consumer Price Index (CPI) number to come in hot on Tuesday after a revised December number made the rounds last Friday.

Netflix stock news: New password sharing crackdown leads some to cancel accounts

Netflix stock is up by 0.5% in Monday's premarket despite the brouhaha that has formed around the #CancelNetflix hashtag. Last Wednesday Netflix finally did a partial rollout of its crackdown on password sharing. It is commonly known that friends and relatives share their Netflix passwords between households, a practice that has been around for years. Netflix even once supported the practice openly.

After stalling subscriber growth early in 2022, however, Netflix announced it would be testing a new rule in Latin America that forbid password sharing between separate households. Then last Wednesday Netflix expanded the new rule to New Zealand, Candada, Portugal and Spain. Rather than sharing passwords with another household, the owner of the account must pay a separate fee to allow password sharing. 

"Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub account for up to two people they don’t live with — each with a profile, personalized recommendations, login and password — for an extra CAD$7.99 a month per person in Canada, NZD$7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain," Netflix said in a statement on its website.

This has led many former subscribers to end their subscriptions with the streaming giant and post their cancellations on Twitter or Facebook alongside the hashtag #CancelNetflix. Of course, we cannot know how much this will affect subscriptions levels until the next earnings release (late April) or if the new sharing fee will make up for revenue lost from the cancellations.

Separately, the United States Bureau of Labor Statistics released an updated reading for December's CPI that revised that reading from -0.1% MoM to 0.1% MoM. In other words it moved the needle from deflation to inflation. At least some analysts think this provides the impetus to expect a miss to the upside on Tuesday's January CPI figure. Wall Street has been expecting core inflation to rise 0.4% MoM. If inflation comes in hot, expect Netflix and other tech stocks to decline immediately. This is due to a higher inflation reading raising expectations that the Federal Reserve will need to increase interest rates more rapidly and keep them higher for longer.

Netflix stock forecast

Last week ended with Netflix stock rebuffed harshly two sessions in a row from resistance at the top trendline. That upper trendline in the price channel has kept NFLX stock in line since October of last year. Despite the optimism in the broad market on Monday morning, most likely this trend will continue with Netflix stock dropping to support at the $330 to $333 range that worked as resistance in December and January. By breaking below the 21-day moving average on Friday, this would seem like the obvious prediction.

If inflation comes in red hot on Tuesday or if the #CancelNetflix hashtag begins to show results, NFLX could again take a stab at the lower trendline, which is now around $315. Netflix stock has not retested this trendline support since December 28, but the Relative Strength Index (RSI) has been falling rapidly and looks prepared to cross below the 50 midline, typically a bearish sign.

NFLX daily chart