Netflix, Inc. (NASDAQ:NFLX) experienced a decline in its share price on Wednesday following the release of its fourth-quarter results and a somewhat cautious revenue and earnings forecast for the first quarter. The report, issued after Tuesday’s market close, fell short of analyst expectations for upcoming earnings despite the quarterly beat, prompting a number of financial institutions to adjust their price targets lower.
In its quarterly filing, Netflix posted earnings per share (EPS) of 56 cents, narrowly surpassing the consensus estimate of 55 cents. The company's reported quarterly revenue totaled $12.05 billion, again exceeding the anticipated figure of $11.97 billion. These results marked an 18% increase in revenue compared to the same quarter in the prior year, a growth driven mainly by an increase in global memberships, augmented subscription pricing, and income derived from advertising. Netflix further noted an approximate 30% year-over-year rise in operating income during this period, with paid memberships surpassing 325 million users worldwide.
Despite the strong quarter, Netflix offered first-quarter guidance projecting earnings per share of 76 cents and estimated revenue around $12.16 billion. The company indicated its expectation that advertising revenue will continue to expand, supporting ongoing investments in content creation, advertising initiatives, and exploration of emerging formats. These newer ventures include live events, video podcasts, and gaming content, suggesting a strategic diversification of media offerings.
Following Netflix's announcement, various analysts responded by adjusting price targets downward while maintaining their current ratings. Jeffrey Wlodarczak of Pivotal Research sustained a Hold rating, lowering his price target from $105 to $95. Similarly, Goldman Sachs analyst Eric Sheridan maintained a Neutral stance but reduced the target from $112 to $100. Needham’s Laura Martin kept a Buy rating intact, decreasing the price cap from $150 to $120. Rosenblatt’s Barton Crockett also preserved a Neutral view, moving the target from $105 to $94. Guggenheim analyst Michael Morris retained a Buy rating yet lowered his price objective from $145 to $130.
Examining Netflix’s technical indicators reveals a stock under pressure. It is currently trading 11.2% below its 20-day simple moving average (SMA) and 25.6% under its 100-day SMA, signaling a pronounced downward trajectory. Over the past year, Netflix shares have yielded a marginal increase of 0.34%, residing closer to the 52-week low than the high, which mirrors ongoing challenges in its market performance.
The Relative Strength Index (RSI) sits at 25.74, suggesting the stock is oversold, a condition that might indicate a rebound if buying interest picks up. Concurrently, the Moving Average Convergence Divergence (MACD) is above its signal line, pointing to some bullish momentum amidst a broadly bearish trend. This combination reflects a mixed outlook that may keep investors cautious in the near term.
Benzinga Edge metrics further characterize Netflix’s current standing in the market with disparity among investment strengths and vulnerabilities. The company registers a "Bearish" score of 14.61 out of 100 in Momentum, implying it is underperforming relative to the broader market. Quality metrics are categorized as "Solid," with a 73.95 score, denoting financial health. Conversely, a low Value score of 14.68 flags the stock as expensive compared to peers, while a Growth score of 75.83 points to promising future expansion potential.
Summarizing these factors, Netflix’s Benzinga Edge analysis outlines a nuanced perspective, combining robust growth and balance sheet strength with valuation concerns and lagging momentum, outlining a cautious environment for investors. At the time of this report, Netflix shares had declined by 6.82%, trading near $81.14 per share, underscoring market apprehension following the earnings disclosure.