Netflix Stock Surges 13% In A Week – What Are The Chances Of Further Rise?

by Trefis Team
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Netflix stock (NASDAQ: NFLX) has increased 13% over the last 5 trading days, after the company reported better than expected Q4 and FY 2020 results. The streaming giant added 8.51 million new subscribers in Q4 2020, much higher than its own forecast and analysts’ expectations of 6.06 million. It passed the 200 million subscriber milestone for the first time. NFLX more than doubled its operating income (on y-o-y basis) in Q4’20, due to higher revenues and lower marketing expenditure. Along with much better operating metrics, two important highlights drove the rally in the stock. Firstly, NFLX said it will stop relying on more debt to fuel its growth, instead its cash balance of $8.2 billion and undrawn credit lines will be used for future growth. Secondly, the management said it is considering share buybacks (something NFLX has not done in a decade), a move that will increase earnings per share in the future.

The above factors have been responsible for a 13% rally in NFLX stock in a week. In comparison, the broader S&P 500 grew just 1.4% over the last 5 trading days. Now, is NFLX stock poised to grow further? We believe that there is a 55% chance of a rise in NFLX stock over the next month (21 trading days) based on our machine learning analysis of trends in the stock price over the last 5 years. See our analysis on Netflix Stock Chances Of Rise for more details.

5D: NFLX 13%, vs. S&P500 1.4%; Outperformed market

(3% likelihood event)

  • Netflix stock rose 13% over a 5-day trading period ending 1/23/2021, compared to broader market (S&P500) rise of 1.4%
  • A change of 13% or more over 5 trading days is a 3% likelihood event, which has occurred 36 times out of 1256 in the last 5 years

10D: NFLX 11%, vs. S&P500 1.1%; Outperformed market

(35% likelihood event)

  • Netflix stock rose 11% over the last 10 trading days (2 weeks), compared to broader market (S&P500) rise of 1.1%
  • A change of 11% or more over 10 trading days is a 35% likelihood event, which has occurred 435 times out of 1240 in the last 5 years

21D: NFLX 6.9%, vs. S&P500 4.1%; Outperformed market

(36% likelihood event)

  • Netflix stock rose 6.9% the last 21 trading days (1 month), compared to broader market (S&P500) rise of 4.1%
  • A change of 6.9% or more over 21 trading days is a 36% likelihood event, which has occurred 437 times out of 1198 in the last 5 years

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