Netflix Stock Nears Record High After Strong Subscriber Growth

Netflix is the best S&P 500 stock so far this year

Apr 17, 2018 at 10:32 AM
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Shares of Netflix, Inc. (NASDAQ:NFLX) have shot 7.1% higher to trade at $329.74, after the streaming giant said it added 1.96 million new U.S. subscribers in the first quarter, and 5.46 million new international subscribers -- topping analysts' estimates for 6.5 million global additions. Netflix also projected 6.2 million new customers in the second quarter, roughly one million more than expected. Plus, first-quarter profit surged to 64 cents per share, while revenue rose 40% to $3.7 billion, with both figures matching the consensus forecast.

Following last week's bevy of bull notes, Wall Street was quick to chime in after Netflix earnings, too. J.P. Morgan Securities offered up the most upbeat outlook in the onslaught of price-target hikes the FAANG stock received, boosting its target price to $385 from $328 -- a nearly 17% premium to current trading levels. RBC, meanwhile, lifted its price target to $360 from $350, saying NFLX has been one of the top 10 surprises this year.

Today's surge brings Netflix stock's year-to-date gain to 72% -- making it the best stock on the S&P 500 Index (SPX) so far in 2018. The shares are now trading within a chip-shot of their March 12 record high of $333.98, topping out earlier at $330, with the company quickly closing in on a $150 billion market cap. At last night's close, Netflix had a market cap of $133.56 billion.

Amid today's post-earnings bull gap, options volume is accelerated, with more than 96,000 calls and 90,000 puts on the tape already. This is six times what's typically seen at this point in the day, with volume pacing in the 100th annual percentile. However, Netflix still has a long way to go before topping the annual high of 581,010 contracts traded in a single session, hit on July 18.

Early options traders appear to be liquidating their positions, with closing activity detected at the April 330 call and 300 put. Elsewhere, speculators could be selling to open April 320 puts, while also purchasing new positions at the April 315 put.

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