Watch Scott Jennings Slap Down This Shoddy Talking Point About the Spending Bill
Merry Christmas, And Democrats Can Go To Hell
A Quick Bible Study Vol. 247: Advent and Christmas Reflection - Seven Lessons
O Come, O Come, Emmanuel, and Ransom Captive Israel
Why Christmas Remains the Greatest Story of All Time
Why the American Healthcare System Has Been Broken for Years
Christmas: Ties to the Past and Hope for the Future
Trump Should Broker Israeli-Turkish Rapprochement for Peace in Middle East
America Must Dominate in Crypto
Biden Was Too 'Mentally Fatigued' to Take Call From Top Committee Chair Before...
Who Is Going to Replace JD Vance In the Senate?
'I Have a Confession': CNN Host Makes Long-Overdue Apology
There Are New Details on the Alleged Suspect in Trump Assassination
Doing Some Last Minute Christmas Shopping? Make Sure to Avoid Woke Companies.
Biden Signs Stopgap Bill Into Law Just Hours Before Looming Gov’t Shutdown Deadline
OPINION

Still Time To Invest In Netflix?

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
Advertisement
Advertisement
Advertisement
AP Photo/Matt Rourke

Yesterday was one of those sessions where the market couldn’t get out of the starting gate, but buyers continued to sniff around looking for opportunities. This is why so many of the best-performing stocks were beaten-down names that have begun building a base. Just for clarification, ‘beaten down’ means it is a lowered share price, but that doesn’t always mean it’s oversold. Sometimes these stocks are still overvalued and pausing before the next leg lower.

Advertisement

That being said, in a market driven by machines and emotions, even great stocks can see their share price become oversold.

So, buyers bought “cheap” stocks and bid up the Russell 2000 again, as that index is now up more than 3% in the last five sessions but up only 13% for 2019.

The Biggest Bottom Fish

The kind of bottom fishing seen since late summer is often done by professional money managers in hopes of catching an upside pop that helps their performance catch up. That’s what happened to Netflix (NFLX) after the close. The company posted its financial results:

  • Revenue: $5.24 billion, consensus: $5.25 billion
  • Earnings: $1.47, consensus: $1.04
  • Domestic subscribers: 517,000, consensus: 802,000
  • International subscribers: 6.26 million, consensus: 6.05 million
  • 64 million watched “Stranger Things” in four weeks

I was very impressed with the continued contributing growth in margins.

The talking heads spent most of the evening trying to talk the stock lower, which makes me think it could hold onto last night’s gains. The stock is oversold, and while few would call it a value investment after $300, the next big resistance point is $336.00.

By the way, Netflix’s DVD business is still around. Last quarter, there were 16,000 free trials and 2,276,000 subscribers generating $71.9 million in revenue and sporting a 61.3% margin.

Advertisement

There is a 5% short position of Netflix shares. The squeeze could be powerful; however, I think once all the new rivals have been officially on the scene for six months to a year, we’ll discover Netflix will remain the top choice of consumers, and the stock will probably reflect that value (which will be higher than where the stock opened today).

Between now and then, look for talking heads to jawbone the stock, even as the investment proposition improves.

Portfolio Approach

Communication Services

Consumer Discretionary

Consumer Staples

1

3

2

Energy

Financials

Healthcare

1

2

2

Industrial

Materials

Real Estate

3

2

1

Technology

Utilities

Cash

3

0

0

Join the conversation as a VIP Member

Recommended

Trending on Townhall Videos