Wednesday, 27 January 2016

NFLX - remaining broadly weak

It was another rough day for Netflix (NFLX), settling -6.8% @ $91.20. Next support is the Aug'2015 flash-print low of $85.50. The bigger monthly cycles are highly suggestive of $70 by early summer... not least if sp'1600s.

NFLX, daily

NFLX, monthly (arithmetic scale)


*note the monthly MACD (blue bar histogram) cycle, set to turn negative at the February open.

Suffice to add...

With recent earnings of 7 cents, that offers a PE of around 300.. which is clearly ludicrous.

I have a huge respect for the company, now a producer of some of the finest TV shows ever made. NFLX continues to expand its reach across the globe, and has had a huge effect on the TV and movie industry.

However, despite consistent growth, profits are razor thin. The business that NFLX operates within, is wide open to new competition, but for now, NFLX is still leading the way.

If the US/world equity markets see a collapse into Q4, prime target for NFLX would be $40. Right now that understandably would appear to be a crazy downside target.

Ironically though, that would still make for a PE of around 120.. which is clearly still way beyond twilight zone territory.