Netflix, Inc. (NFLX) shares reached the $300 mark on Friday and continued their rally to new all-time highs this week. On Monday, Macquarie analysts increased their price target from $276 to $300, citing higher-than-average revenue from 4K trends. TechCrunch also reported that Netflix is adding family-friendly options, such as suitability ratings and PIN codes for content, ahead of The Walt Disney Company's (DIS) streaming launch next year.
Many analysts had been concerned that rising content costs would offset revenue growth from new subscribers and price increases. Last quarter, the company put these concerns to rest with much better-than-expected growth in subscribers, including 1.98 million domestic additions and 6.36 million international additions. These figures were well ahead of analyst estimates calling for 1.29 million and 5.05 million, respectively. (See also: Netflix – Up 60% YTD – to Continue Rally: Street Bulls.)
From a technical standpoint, the stock broke out from upper trendline resistance and R1 resistance at $313.79 on the way toward R2 resistance at $336.20. The relative strength index (RSI) appears overbought at 78.45, but the moving average convergence divergence (MACD) experienced a bullish crossover. These technical indicators suggest that the stock could see a period of consolidation over the coming sessions.
Traders should watch for some consolidation between R1 resistance at $313.79 and R2 resistance at $336.20 before a further move higher. If the stock breaks out from R2 resistance, traders could see a move toward fresh all-time highs. If the stock breaks down from R1 support, traders should watch for a move to trendline support at around $305.00. A further breakdown from $290.00 could signal a longer-term reversal. (For more, see: Disney's Netflix Rival Will Have a Lower Content Budget.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.