Netflix Stock Surges 10%: Here’s the Next Buy the Dip Price

Streaming giant Netflix’s stock raced more than 10% higher on Wednesday after the company impressed investors with their latest earnings report.

Netflix (NFLX) reported its first-ever $10 billion revenue quarter, signaling continued financial health. Additionally, Netflix has raised its revenue forecast for 2025 to between $43.50 billion and $44.50 billion.

Last quarter saw a record global increase in paid memberships.  Almost 19 million new subscribers were added driven by a strong content slate and seasonal trends.

The company’s advertising strategy is paying off well.  

For the quarter, Netflix experienced a 30% quarterly growth in its ads-supported memberships.  Ad plans contributed to over half of the new sign-ups. The company also plans to enhance its advertising effectiveness by developing its own ad tech stack.  That plan will roll out in the U.S. in April 2025. 

The move is expected to simplify the advertising process and attract more advertisers by offering increased flexibility and reduced activation barriers.

Netflix reported improvements in its operating margins.  Margins for the fourth quarter rose to 22.2%, surpassing the company’s 21.6% target.  The uptick is primarily attributed to higher-than-expected revenue.  

Netflix continues to see their margins increase, forecasting a 28.2% target for the next quarter.

Starting in Q1, Netflix will shift how it reports its metrics.  Netflix will abandon regular quarterly updates on paid memberships and Average Revenue per Member (ARM).  Instead, Netflix plans to issue a bi-annual engagement report to coincide with its Q2 and Q4 earnings, highlighting a new focus on user engagement and operational efficiency.

Investors will want to pay attention to the stock’s price over the next week.

Shares surged more than 18% higher in late trading on Tuesday following the report.  Today, the stock is only 10% higher.

Investors appear to have lost their initial enthusiasm over the earnings results after Netflix’s outlook appears slightly muted.

In a show of technical force, the $1,000 price held staunchly as resistance as the stock started trading on Wednesday.  Investors appear to be taking profits from the stock after its 97% one-year run higher.

The stock is likely to provide an opportunity for long-term investors to buy at lower prices, but don’t wait too long.

Netflix shares are drawing what is referred to as a “touch and go” pattern.

This occurs when a stock’s 20-day moving average moves down to its bullish 50-day moving average.  The results are often a sudden shift in bullish activity as momentum becomes stronger after a healthy correction.

Technically, the stock’s price is likely to drop back into a “normal” range around $930 over the next week of trading.  From there, expect to see a consolidation that will lead to a robust trend towards a target price above $1,000.

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