Netflix Checkmates Earnings with Revenue Beat, New Subscribers

The security earned no less than 23 price-target hikes this morning

Digital Content Manager
Jan 20, 2021 at 11:00 AM
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The shares of Netflix Inc (NASDAQ:NFLX) are one of the best stocks on the Nasdaq today, last seen up 13.7% at $570.46, and earlier hitting an all-time high of $577.77 out of the gate. The new record came despite the streaming giant reporting worse-than-expected fourth-quarter earnings.

Instead, the impressive bull gap can be attributed to a revenue beat, after Netflix originals such as "Bridgerton" and "The Queen's Gambit" helped the company add no fewer than 8.51 million paid subscribers. In turn, the equity earned two upgrades -- including one from UBS to "buy" from "neutral" -- and 23 price-target hikes, with the highest one coming from Pivotal Research to $750. 

Prior to today's surge, Netflix stock had been cooling off from a July 13 peak of $575.37. And while the security made attempts at those levels in August and October, overhead pressure at the $570 mark had been keeping a tight lid on gains. Now, the equity has officially broken through that ceiling, and sports an impressive 68.6% year-over-year lead. 

Analysts were already optimistic towards Netflix stock, which makes the flurry of analyst attention today even more impressive. Of the 29 in coverage, 20 carried a "buy" or better rating, while nine called it a tepid "hold" or worse. Plus, the 12-month consensus target price of $600.59 is a 5.9% premium to its current perch. 

Drilling down to today's options activity, 125,000 calls and 76,000 puts have crossed the tape in just the first half hour of trading, which is 15 times the average intraday amount. Most popular by far is the weekly 1/22 600-strike call, followed by the 580-strike call in the same series, with new positions being opened at both. 

For those looking to weigh in on NFLX's next move with options, now could be the right opportunity. The equity's Schaeffer's Volatility Index (SVI) of 43% sits in the relatively low 20th percentile of its annual range. In simpler terms, options players are pricing in low volatility expectations right now.


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