Why Netflix Stock Is Up By 8% Today

Netflix Stock Rallies After Analyst Upgrade

Shares of Netflix gained strong upside momentum and moved back above the $400 level after an upgrade from Citi analysts.

While the analyst upgrade served as a material driver for Netflix stock, it should be noted that other tech stocks are also performing well today. For example, Tesla stock is up by 7% while NVIDIA stock is gaining 4% during the current trading session.

It looks that traders have decided to pick up shares of oversold tech giants that have been severely punished during the recent sell-off in the tech space, which was triggered by rising Treasury yields. While the yield of 2-year Treasuries stays close to recent highs, the market’s appetite for risk is growing, and traders move back to fast-growing tech companies.

What’s Next For Netflix Stock?

Netflix stock has found itself under serious pressure after the company released its quarterly report. The company reported revenue of $7.71 billion and earnings of $1.33 per share, easily beating analyst estimates. However, the company’s subscriber additions missed analyst estimates, causing a massive sell-off which pushed the stock from the $520 level to the $380 level.

Analysts expect that Netflix will report earnings of $10.96 per share in 2022, so the stock is trading at roughly 38 forward P/E which is not cheap. In addition, earnings estimates have been cut materially after the recent report, and it remains to be seen whether analysts will continue to believe in the fast growth of Netflix.

Back in November, Netflix stock made an attempt to settle above the $700 level, so it’s not surprising to see that speculative traders decided to pick some shares when they traded near the $400 level. However, the stock is not cheap even after the massive sell-off, and its near-term dynamics will depend on whether the market is ready to move funds back into high-PE growth stocks.

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