Netflix Inc (NASDAQ: NFLX) embarked on a remarkable journey in 2023, rebounding with a staggering 65% return, surpassing the tech-heavy Nasdaq100 Index. This resurgence followed a tumultuous period in 2022, where the streaming giant experienced a sharp 50% market value loss, marking its first yearly setback in seven years. In response to a challenging year, Netflix strategically pivoted, implementing significant measures to bolster revenue and profitability.
The company’s proactive initiatives included cracking down on password sharing and introducing budget-friendly, ad-supported subscription plans. These strategic moves yielded positive results, evidenced by Netflix’s third-quarter performance. The streaming giant not only exceeded Wall Street expectations by adding 8.8 million subscribers but also forecasted a similar surge in the fourth quarter. Remarkably, Netflix’s chief recently highlighted the ad-supported tier’s success, boasting more than 23 million global active users per month.
With third-quarter revenue reaching $8.5 billion and demonstrating a robust 8% year-over-year growth, Netflix’s strategic implementation appears to be a resounding success. The pivotal question that now lingers in the market’s mind is whether the impressive subscription growth will translate into substantial market value growth for Netflix. As the streaming giant continues to navigate the ever-evolving landscape of the digital entertainment industry, investors eagerly anticipate the unfolding chapters of its success story.
Technical
Netflix Inc’s share price charts a compelling narrative, currently riding the waves of an evident uptrend. The ascending channel pattern, complemented by trading above the 100-day moving average, signifies a bullish trajectory. A pivotal support level at $344.73 per share emerged after a significant upsurge amid oversold RSI conditions, creating a noticeable gap up in the process.
However, the share price encountered headwinds at the $500.89 per share mark, resulting in a pronounced downturn, marking this level as a formidable resistance. A subsequent reversal found support at the 23.60% Fibonacci Retracement level, hinting at a potential turning point. If this level acts as a robust intermediate support, a sustained reversal may propel the share price to retest the $500.89 per share resistance. Conversely, a high-volume breakdown below the 23.60% level could indicate prevailing downside pressures, unveiling the 38.20% level as a potential marker for further declines.
Summary
Netflix’s 2023 revival, with a stellar 65% return, mirrors a strategic triumph. Initiatives like combating password sharing and introducing ad-supported plans propelled a robust Q3. Despite a formidable resistance at $500.89, a reversal at the 23.60% Fibonacci Retracement level signals the potential for further gains, potentially enticing investors in Netflix’s unfolding success.
Sources: Netflix Inc, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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