Goldman Sachs Downgrades Netflix Stock to "Sell"

NFLX is holding near roughly five-year lows

Deputy Editor
Jun 10, 2022 at 9:48 AM
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Netflix Inc (NASDAQ:NFLX) stock is a "sell," according to a Goldman Sachs bear note. In addition to downgrading the FAANG concern, the brokerage firm slashed its price target to $186 from $265, citing the company's focus on profitability as well as recession concerns and heightened competition from other streaming services. NFLX was last seen 5.3% lower to trade at $182.56.

Coming into today, analysts were sitting on the fence, with 21 brokerages rating Netflix stock a "hold," while one says "sell," and two suggest a "strong sell." However, six "strong buy" recommendations indicates there's still some room for members of the brokerage bunch to sour on the streaming giant. Meanwhile, the 12-month consensus price target of $320.92 -- a 74.6% premium to last night's close -- also suggests additional price-target cuts could be coming through soon.

Options traders are likely disappointed by the news, as there's been a penchant for bullish bets of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Netflix stock's 10-day call/put volume ratio of 1.99 stands higher than 72% of readings from the past year.

This sentiment is reflected by the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.62, which sits higher than just 9% of readings from the past year -- indicating short-term options traders are incredibly call-biased at the moment.

For those looking to weigh in, options look like a solid move at the moment. According to its Schaeffer's Volatility Scorecard (SVS)  tally of 94 out of 100, NFLX has consistently realized bigger returns than options traders have priced in over the last 12 months.

On the charts, a late-April bear gap pushed the shares near roughly five-year lows, and they've failed to close above $208 ever since. Today's negative price action has pushed the equity back below the 30-day moving average, putting the equity at a 69% year-to-date deficit. 

 

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