Checking In With Struggling Netflix Stock

Netflix has not recovered from its post-earnings bear gap back in January

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It's been over two months since Netflix, Inc. (NASDAQ:NFLX) sold off post-earnings and sent shockwaves through Wall Street. With another earnings season around the corner, how has the FAANG stock fared since then? 

Netflix stock has taken a 36.8% haircut in 2022, but was able to tack on 5% in the last 30 days. However, NFLX's 50-day moving average still looms above, a trendline that has been cleared on a closing basis only twice this year. FAANG stocks usually are acclaimed by analysts, but its interesting that 12 of the 29 brokerages are on the sidelines with tepid "hold" ratings.

NFLX Stock Chart

The streaming entertainment company’s annual revenues are up 19% since fiscal 2020 and have grown 88% since fiscal 2018. NFLX's net income is also up 85% since fiscal 2020 and has grown 322% since fiscal 2018. In addition, Netflix is estimated to grow revenues 12.5% for both fiscal 2022 and fiscal 2023, as well as increase earnings by 2.1% for fiscal 2022 and a massive 30.5% for fiscal 2023. However, NFLX holds $6.03 billion in cash and $18.12 billion in total debt on their balance sheet, which could hurt its long-term profitability potential.

Still, at a forward price-earnings ratio of 35.34 and a price-sales ratio of 6.01, Netflix stock is currently at one of the lowest valuations it has seen in years, giving long-term investors an intriguing entry point to one of the decades' most prolific tech disruptors. 

If an investor wants fewer dollars at risk but wants to take a flier on NFLX, options are an attractive route at the moment. The shares' Schaeffer's Volatility Scorecard (SVS) sits up at 92 out of 100. This indicates the equity has exceeded options traders' volatility expectations over the past year.

 

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