The Netflix (NASDAQ: NFLX) stock price is up by more than 0.60% in premarket trading even as competition in the streaming space increases. The stock rose by more than 1% on Monday, bringing its total market cap to more than $222 billion.
Rotation from lockdown stocks
The Netflix stock has dropped by more than 15% from its highest level this year. This is partly because of the company’s subscriber miss in its quarterly results and the ongoing rotation from lockdown stocks to reopening stocks.
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Indeed, in the past few months, some of the companies that did well during the lockdown like Zoom Video and AMD have lagged. On the other hand, some of the companies that lagged last year like AMC Entertainment have done relatively well.
Investors believe that companies like Netflix will see a slower growth this year as people go back to work. This is in contrast to last year when most people worked and spent most of their times at home.
There is evidence that this transition is happening. In its most recent quarterly results, Netflix said that it added just 3.8 million subscribers in the first quarter, less than the 6.2 million it had predicted. Similarly, in its earnings report, Walt Disney said that it added 8.7 million new subscribers, bringing its total members to more than 103.6 million. This was less than the expected increase to more than 109 million.
Amazon to buy MGM
The Netflix stock price has also declined because of the rising competition. Disney+ has proven to be a formidable competitor by adding more than 100 million members in less than 2 years.
Meanwhile, AT&T has announced a deal to merge its Time Warner stake with Discovery. The goal is to create a $150 billion company that can compete well with Netflix.
And today, Amazon is said to near a $9 billion deal to acquire MGM in a bid to boost its library. The deal will see the company own some of the best-known movie franchises like James Bond, Pink Panther, and Rocky. It has also produced popular shows like The Handmaid’s Tale and Fargo. There are also rumours that ViacomCBS could merge with NBCUniversal.
Still, analysts believe that Netflix will continue to have a strong market share even as competition rises. Furthermore, the company has added millions of customers after the launch of Discovery+, HBO Max, Paramount+, CBSNow, and Disney+, among others.
According to Marketbeat, the average analysts estimate on Netflix stock is $593, which is 18% above the current level. 30 days ago, the average was at $590, meaning that analysts are getting enthusiastic. For example, analysts at Jefferies expect it to rise to $620 while those at Stifel, Pivotal Research, and Piper Sandler expect it to rise to more than $600.
Netflix stock price analysis
The daily chart shows that the Netflix stock price has struggled lately. It has formed a rectangle pattern whose support and resistance levels are at $466 and $576. Also, it is below the 50-day and 100-day exponential moving averages, which is a bearish sign. It has also formed a head and shoulders pattern. Therefore, for now, the stock will likely remain in the current range as investors wait for the next catalyst. Still, because of the H&S pattern, there is a possibility that it will break out lower.