Trading Netflix After Q3 Performance

October 24, 2023 00:09

Investors have been eagerly awaiting how the crackdown on password sharing and the new ad-tier subscription plan will affect Netflix's subscriber numbers and overall growth. Learn more about Netflix's fiscal third-quarter performance and what the analysts are forecasting for the stock.

Stock: Netflix Inc
Symbol for Invest.MT5 Account: NFLX
Date of Idea: 23 October 2023
Time Line: 1 - 6 months
Entry Level: $412.00
Target Level: $600.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose, as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Netflix Fiscal Q3 2023 Performance

Here are some of the key highlights from the latest fiscal third-quarter earnings report from Netflix: 

  • Earnings per share of $3.73 vs $3.49 expected 
  • Revenue of $8.54 billion vs $7.93 billion a year earlier 
  • Net income of $1.68 billion vs $1.4 billion a year earlier 
  • Added 8.76 million global subscribers vs 5.49 million expected 
  • Total membership of 247.15 million vs 243.88 million 
  • Ad plan membership growth is up 70% quarter over quarter 

Netflix beat analyst estimates on most metrics. With most tech companies, subscriber numbers are the most important and that is effectively where income is earned. While some analysts and investors were fearful the password-sharing crackdown would affect its subscriber numbers it - instead - helped to boost them.  

8.76 million subscribers were added over the last quarter from all around the world which is much higher than the 5.49 million analysts were expecting. The figure represents the biggest net add of subscribers in a quarter since the second quarter of 2020 (10.1 million subscribers were added during the COVID-19 pandemic).  

The new ad-based subscription plan grew 70% quarter over quarter but Netflix didn't release how many subscribers are using this plan. However, there are some concerns to take into consideration. Netflix and other members of the Alliance of Motion Picture and Television Producers agreed on a deal with Hollywood writers for higher wages and benefits which will affect the bottom line of production companies such as Netflix.  

The management team has also announced plans to increase the price of its basic and premium services while the standard plan and ad tier pricing will remain the same. This may put off some subscribers as the cost of having multiple subscriptions with other providers starts to add up. One cannot ignore the impact of higher interest rates and borrowing costs which may lead to consumers cutting back on certain subscriptions, thereby affecting the company's revenue and share price.  

Netflix Stock Forecast - What do the Analysts Say?

According to analysts polled by TipRanks for a Netflix stock forecast in the past 3 months, there are currently 22 buy, 11 hold and 1 sell ratings on the stock. The highest price level for a Netflix stock forecast is $600.00 with the lowest price target at $325.00. 

The average price target for a Netflix stock forecast is $459.47.

Source: TipRanks, 23 October 2023


An Example Trading Idea for the Netflix Stock Price

An example trading idea for the Netflix share price could be as follows:  

  • Buy the stock on a break above the post-earnings high at $412.00 to allow for volatility. 
  • Target just below the highest analyst price target of $600.00. 
  • Keep your risk small at a maximum of 5% of your total account.   
  • Time Line = 1 – 6 months  
  • If you buy 10 Netflix shares:  
    • If target is reached = $1,880.00 potential profit [($600.00 - $412.00) * 10 shares].

Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering the upcoming price changes in Netflix's subscriptions and the uncertainty surrounding future interest rate hikes.

Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.

With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Netflix stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.

There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall! 

How to Buy Netflix Stock in 4 Steps  

With Admirals, you can buy shares in companies like Netflix with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

  1. Open an account with Admirals to access the dashboard.   
  2. Click on Trade on one of your live or demo accounts to open the web platform.   
  3. Search for your stock in the search window at the top right to view the live price chart. 
  4. Click Create New Order from the bottom of the screen to open the trading ticket. 
Source: Admirals MetaTrader 5. Netflix. Monthly. Date: Jan 2016 to Oct 2023, captured on 23 Oct 2023. Past performance is not a reliable indicator of future results or future performance.


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Do You See the Netflix Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.

If you believe there is a higher chance Netflix share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.

This means you can trade long and short to potentially profit from rising and falling stock prices.


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Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.