😍 2022-03-17 16:56:15 – Paris/France.
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Heavyweight actions diffusion and Netflix online entertainment has fallen over 41% since the start of 2022
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QXNUMX net subscriber forecast was weak, creating headwinds for NFLX stocks
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Long-term investors may consider buying NFLX shares at current levels
The actions of the entertainment pioneer in diffusion Netflix (NASDAQ 🙂 have fallen more than 41,3% so far this year, and about 32,5% over the past 12 months. In comparison, since January, the index and the Roundhill Services ETF Streaming and technology (NYSE 🙂 are down 11,6% and 24,8%, respectively.
On November 17, 2021, NFLX shares broke above $700 and hit an all-time high. But since then, Netflix stock has come under significant pressure. The stock's 52-week range has been $329,82-$700,99, while the company's market capitalization stands at $156,7 billion.
The latest metrics suggest that global video on demand (SVOD) subscriptions “will grow by 491 million between 2021 and 2026 to reach 1,64 billion. China and the United States will represent 49% of the world total in 2026, compared to 56″. % of 2021”.
Meanwhile, Netflix is the top SVOD provider in the United States. Amazon (NASDAQ 🙂 is next, followed by Disney+ by Walt Disney (NYSE:).
Netflix released its fourth quarter financial results on January 20. Revenue was $7,7 billion, 16% higher than the same period a year earlier. The number of subscribers increased by 8,9% to reach 221,84 million.
The number of net subscribers, which was 8,28 million, is lower than the previous forecast of 8,5 million. Diluted EPS was $1,33, compared to $1,19 in the fourth quarter of 2020.
In its letter to shareholders, NFLX management said:
“Full-year revenue of $30 billion increased 19% year-over-year, while operating profit of $6,2 billion increased 35% year-over-year. year to year. Overall, in 2021, Netflix series accounted for six of the top 10 most searched shows. globally, while our films were two of the top 10. »
The company expects to reach 2,5 million paid net adds in diffusion globally in the first quarter of 2022. While revenue is expected to reach $7,9 billion, diluted EPS is expected at $2,86.
Prior to the fourth quarter earnings release, Netflix shares were hovering around $510. But as of Wednesday's close, the stock price was $357,53. That means NFLX shares are down more than 30% since January's earnings announcement.
What to expect from Netflix action
Among 43 analysts surveyed via Investing.com, NFLX stock is rated “ surpass"
Consensus estimates from analysts surveyed by Investing.com.
Source: Investing.com
Wall Street also has a 12-month median price target of $510,34 for the stock, which is more than 45% above current levels. The 12-month price range currently sits between $330 and $735.
Similarly, based on a number of valuation models, such as those that may consider price-earnings or price-sell multiples or terminal values, the median fair value of Netflix shares on InvestingPro amounts to $504,21.
Valuation models by InvestingPro.
Source: InvestingPro
In other words, the fundamental valuation suggests the stock could rise around 41%.
We can also look at Netflix's financial health, determined by ranking over 100 factors against its peers in the communications services industry.
For example, in terms of growth and revenue, it scores 4 out of 5. Its overall rating of 3 points is a good performance rating.
Currently, NFLX's price-to-earnings, price-to-book, and price-to-sales ratios are 30,6x, 9,9x, and 5,3x, respectively. Comparable measurements of its peers stand at 3,7x, 3,2x and 4,8x respectively. These numbers show that despite the recent price decline, the fundamental valuation of NFLX stock remains rich.
For its part, Amazon's price-earnings, price-to-book, and price-to-sales ratios are 46,0x, 11,1x, and 3,3x, respectively. Finally, Disney's metrics come out at 79,2x, 2,8x, and 3,4x, respectively.
We expect Netflix shares to build a base between $340 and $360 in the coming weeks. Thereafter, equities could begin a new upward leg.
Add NFLX stocks to portfolios
Netflix bulls who aren't worried about short-term volatility might consider investing now. Its price target would be $504,21, as suggested by fundamental valuation models.
Alternatively, investors could consider buying an exchange-traded fund (ETF) that holds NFLX shares as a stake. Some examples are:
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Roundhill Services ETF Streaming and technology (NYSE 🙂
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Invesco NASDAQ Internet ETF (NASDAQ 🙂
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iShares Evolved US Media and Entertainment ETF (NYSE 🙂
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First Trust Internet Index Fund (NYSE 🙂
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ETF Pacer BioThreat Strategy (NYSE 🙂
Finally, investors expecting Netflix stock to rally in the coming weeks might consider setting a bullish buy spread.
Most options strategies are not suitable for all retail investors. Most options strategies are not suitable for all retail investors. Therefore, the following discussion of NFLX stocks is offered for educational purposes and not as an actual strategy for the average retail investor to follow.
Netflix stock bullish buy spread
Intraday price at time of writing: $351,40
With a propagated bullish call options, a trader has a long call with a strike price, or strike, low and a short buy at the price of strike higher. Both parties to the transaction have the same underlying stock (i.e. Netflix) and the same expiration date.
The trader wants the NFLX stock price to rise. In one propagated of bullish call options, the levels of potential gains and losses are limited. The trade is established by a net cost (or net debit), which represents the maximum loss.
The operation propagated Today's bullish call option is to buy the 360 point call option expiring June 17 for $28,50 and sell the 370 point call option for $24,10 .
Buying this trade costs the investor about $4,40, or $440 per contract, which is also the maximum risk of this trade.
We must keep in mind that the investor could easily lose this amount if the position is held until expiry and both tranches expire worthless, i.e. if the price of NFLX shares at expiration is below the price of strike of the long call option (or $360 in our example).
To calculate the maximum potential profit, we can subtract the premium paid from the difference between the two strikesand multiply the result by 100. In other words: (10 – 4,40) x 100 = $560.
The trader will make this maximum profit if the price of Netflix shares is equal to or higher than the price of strike of the short call option (the strike higher) at expiration (or $370 in our example).
conclusion
In recent months, Netflix shares have come under significant pressure. However, the decline has improved the margin of safety for buy-and-hold investors, who may soon consider investing in the real estate giant. diffusion. On the other hand, experienced traders could also set up an options trade to benefit from a possible rise in the price of NFLX stock.
SOURCE: Reviews News
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