Netflix Stock Eyes Worst Day Since 2016 After Surprise Subscriber Loss

Many analysts adjusted their ratings on the FAANG name

Managing Editor
Jul 18, 2019 at 10:11 AM
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One of the biggest and most surprising earnings losers this morning is Netflix, Inc. (NASDAQ:NFLX), down 9.7% to trade at $328.46 this morning. The streaming giant lost 126,000 U.S. video streaming customers for the first time in eight years, and international subscriber additions came in lower than expected. This has offset better-than-expected second-quarter adjusted earnings of 60 cents per share on $4.92 billion in revenue, in-line with expectations.

Analysts have rushed to chime in on the FAANG name. No fewer than 10 brokerages have issued price-target cuts, the lowest coming from Instinet, to $310. Others remain optimistic, with RBC saying Netflix's 'long-term thesis is still intact,' and Piper Jaffray touting new seasons of "Stranger Things," "Orange is the New Black," and "The Crown," as having an impact in the second half of 2019. Pivotal Research and Wedbush both raised their targets, to $440 and $188, respectively. 

This is pacing to be Netflix stock's worst single-session drop since July 2016. It's also on track to be the equity's sixth straight loss, its longest losing streak since mid-May. Now trading at its lowest point since late January, NFLX has breached support at its 320-day moving average, a trendline that caught pullbacks in late May and early June. 

As alluded to above, the analyst community is overwhelmingly bullish on NFLX. Heading into today, 23 of 26 in coverage rate the security a "buy" or better, and its consensus 12-month price target of $385.48 sits just below its Oct. 2 annual high of $386.80. 

Options traders have been betting bullishly. Netflix's Schaeffer's put/call open interest ratio (SOIR) of 0.84 sits in the low 7th percentile of its annual range, suggesting short-term option players have rarely been more call-heavy during the last 12 months. 

 

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