Netflix, Inc. (NFLX) shares fell more than 2% during Monday's session following a 5.5% drop on Friday.
CEO Reed Hastings believes that Apple Inc. (AAPL) and The Walt Disney Company (DIS) will usher in a "whole new world" for streaming services in November. The executive believes that Netflix will face tough competition as consumers have "a lot of choice," particularly with Amazon.com, Inc. (AMZN) building up its streaming services with acquisitions like "Fleabag." Hastings believes that the key to success for Netflix will be adhering to its core strategy of offering primarily in-house binge content.
Earlier this morning, Loop Capital's Alan Gould chimed in saying that the broader theme of transitioning away from traditional television to streaming will supersede competitive headwinds facing Netflix. The upcoming release of "The Irishman" could also yield the company's first blockbuster and alter the perception of the value of its service. However, Gould admits that there are still concerns about the possibility of two consecutive quarters of subscriber misses.
From a technical standpoint, Netflix stock accelerated its decline that began in mid-July, giving up more than 30% over the time frame. The relative strength index (RSI) fell to oversold levels with a reading of 28.13, but the moving average convergence divergence (MACD) experienced a bearish crossover. These indicators suggest that the stock could see some consolidation over the near term, but the intermediate trend remains bearish for the time being.
Traders should watch for consolidation between S2 support at $261.79 and S1 support at $277.77 over the coming sessions. If the stock breaks down, traders could see a move toward reaction lows of around $225.00 made in late 2018. If the stock regains ground, traders could see a move toward the pivot point and 50-day moving average at around $300.00. The company's next earnings date is coming up on Oct. 15, 2019.
The author holds no position in the stock(s) mentioned except through passively managed index funds.