Takeaways
- Netflix shares surged in extended trading on Thursday after the streaming giant reported first-quarter earnings which exceeded Wall Street expectations. This was boosted by higher subscription rates and ad revenue.
- The stock's recent rebound has coincided with the relative strength index moving higher from the 50 threshold, a reading that has marked the bottom of several prior pullbacks since early 2023.
- Investors should watch key overhead areas on Netflix's chart around $1,065 and $1,300, while also monitoring important support levels near $821 and $697.
Netflix (NFLX), a streaming giant, reported first-quarter earnings above Wall Street expectations. The company’s higher subscription prices and advertising revenues were a major factor.
Netflix shares are up 9% through Thursday’s close and have risen nearly 60% over the last 12 months, as the company continues growing its advertising sales.
Analysts have also touted Netflix’s ability to withstand an economic downturn amid uncertainty related to tariffs, with JPMorgan describing it as the “most resilient” company it tracks. Netflix has also attracted attention for its attempt to double its revenue and achieve a market capitalization of $1 trillion by 2030, which the Wall Street Journal reported earlier this week.
Below, we look at Netflix’s chart for the week and use technical analysis to highlight key price levels that are worth watching.
Momentum leading to Earnings
Netflix shares have retraced up to 23% since their record highs in February. Bulls then stepped in last week, supporting the stock near the 50-week average.
It’s also worth noting that this rebound coincided with a rise in the relative strength indicator (RSI), which had been at 50 for several pullbacks that occurred since early 2023.
The shares have been gaining momentum in recent weeks, and are expected to open at around the psychological $1,000 mark on Monday morning. (U.S. stock markets are closed on Good Friday.
Let’s identify the two key overhead areas of Netflix’s chart which investors may be looking at and also important support levels that you should monitor during retracements.
Watch Out For These Key Areas Above the Roofline
In after-hours trading on Thursday, Netflix shares rose by 3.5% to $1,007 (approximately).
The first area to watch is $1,065. Investors that bought shares at the time of the pullback might decide to place a sell order near the all-time high.
We can project a target for the upside above the ATH using bars pattern analysis. This technique analyzes past trends to forecast future directional movement.
When we apply the tool to Netflix’s chart, the price bars that represent the stock’s upward trend from August to December of last year are taken and overlaid with the low from this month. The analysis forecasts that the target price will be around $1,300. This is about 34% more than Thursday’s close.
If price action is consistent, the trend could last until early August.
Important Support Levels Monitor
Investors should monitor the $821 level during retracements. Investors may seek entry points in this area near the low from last week. This coincides with a five week losing streak that ended early January.
Finally, selling below the level will set up a possible drop to around $697. Netflix shares might find support near the swing high from last July and a period in which the chart drifts sideways between late August and mid-September.
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