Netflix
Netflix (NFLX) shares are having their worst day in more than a year after the company’s earnings report last night.
The results were in line with analysts’ expectations, but management’s lower guidance for the next quarter has investors spooked. In addition, they announced that they will stop reporting net additional subscriber figures moving forward.
Trading 9% lower, shares are now looking for potential support at $550, down from $600 just prior to the earnings call. $550 represents the level that Netfilx shares spiked to immediately follow their last report.
That forms what I refer to as a “muscle memory” price for the stock. These points often support shares.
A break below $550 would see the stock target another 11% decline to its $500 price, which would draw the attention of “value” buyers, given the fact that the company did provide positive results for the current quarter.
Super Micro Computer
Shares of AI server/storage provider Super Micro Computer (SMCI) dropped 20% today.
The crash was caused by the lack of guidance this morning as management confirmed the April 30 earnings call.
For the last five to six quarters, SMCI management has provided an update to their quarterly expectations on the day they confirm the earnings date.
The lack of an earnings update caused investors to immediately trade under the worst-case scenario: That the company would miss.
The 20% decline in share value, while painful, puts the stock in a different light ahead of the report.
The simple fact is that the lack of guidance from SMCI management does not mean that the earnings results are destined for a miss.
But the fact that the market has priced that option into the stock after today suggests that a report that meets or exceeds Wall Street’s expectations will results in a massive rally back to the $1,000 price and higher.
As of now, you can consider this move a “healthy” crash that may result in the best “buy the dip” opportunity this stock has seen in a long time.
American Express
The high-end consumer appears to be holding things together well. At least that’s the message from American Express (AXP)’s earnings report.
The company beat both revenue and earnings per share (EPS) targets and re-affirmed their outlook for the rest of the year. The result is a 6% surge in the stock that takes it to new all-time highs (a clear standout in today’s market).
In general, the credit card companies have been performing well as consumers continue to increase their spending despite the resilient inflation situation.
Since breaking $200, AXP shares have outpaced the rest of the credit card company’s performances as it posts an impressive 25% year-to-date return. For comparison, Visa (V) and Mastercard (MA) are currently returning around 5% for the same period.
The outperformance of American Express hinges on their customer base as reflected by the lower charge-offs and higher card membership fees.
With its bullish 50-day moving average trend and the break to new highs, American Express stock’s intermediate-term target is $250.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.