Trading Strategies For Netflix Stock Before And After Q2 Earnings

Netflix, Inc NFLX, along with Tesla, will kick off big tech earnings on Tuesday when the streaming entertainment company prints second-quarter financial results after the market close.

The stock has been trending higher on the daily time frame since March 13, surging about 66% since that date. On Wednesday, Netflix was climbing slightly north.

When the streaming giant printed its first-quarter results on April 18, the stock dropped about 0.8% the following day before continuing in a fairly consistent uptrend.

For the first quarter, Netflix reported earnings per share of $2.88, beating the Street estimate of $2.86. The company reported revenues of $8.16 billion, which missed the $8.18-billion consensus estimate.

For the second quarter, analysts expect Netflix to report earnings per share of $2.85 on revenues of $8.29 billion. Traders and investors will be watching closely to see how many new subscribers the company was able to add during the quarter.

From a technical analysis perspective, Netflix's stock looks neutral heading into the event, trading in an inside bar pattern but with its relative strength index trending in overbought territory.

It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

Netflix and Tesla will set the stage for this earnings season and a negative reaction to their earnings print could increase volatility in the stock market. Traders wishing to trade the volatility in the stock market can use MIAX’s SPIKES Volatility products. The products, which are traded on SPIKES Volatility Index SPIKE, track expected volatility in the SPDR S&P 500 over the next 30 days.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The Netflix Chart: Netflix started trading on Wednesday with an inside bar pattern and was attempting to break up from Tuesday’s high-of-day heading into its earnings print. The pattern leans bullish because the stock was trading higher before creating the formation.

• Netflix is also trading in a strong uptrend, making a series of higher highs and higher lows. The most recent confirmed higher high was formed at the $450.97 mark on July 5 and the most recent higher low was printed at the $431.04 mark on July 11.
• Bullish traders want to see the stock break up from the mother bar on higher-than-average volume, which could signal the stock will completely close a gap between $458.49 and $506.94, which was left behind on Jan. 21, 2022. If that occurs, the stock is likely to find resistance near the top of the empty trading range.
• Bearish traders want to see Netflix suffer a negative reaction to its earnings print and for the stock to fall under the $430 mark, which would negate the uptrend and possibly give bulls more confidence going forward.
• Netflix has resistance above at $481.63 and at $505.37 and support below at $448.96 and at $425.54.

Read Next: If You Invested $1,000 In Netflix Stock When 'Stranger Things' Debuted, Here's How Much You'd Have Now

Photo via Shutterstock.