Netflix (NASDAQ:NFLX) Shares Gap Down – Here’s Why

Shares of Netflix, Inc. (NASDAQ:NFLX) gapped down prior to trading on Friday . The stock had previously closed at $75.31, but opened at $71.27. Netflix shares last traded at $71.8970, with a volume of 21,940,148 shares changing hands.

Key Stories Impacting Netflix

Here are the key news stories impacting Netflix this week:

• Positive Sentiment: Evercore recommended buying Netflix, arguing that the recent selloff may represent an attractive entry point. Other bullish commentary highlighted the company’s expanding advertising business, aggressive share repurchases and potential for substantial long-term upside. Evercore recommends buying Netflix
• Positive Sentiment: Netflix is pursuing additional live sports and event programming, while a new Korean content agreement could strengthen its global programming pipeline. Management also continues to view advertising and major live events as tools for attracting users and supporting growth. Netflix live sports strategy
• Neutral Sentiment: Netflix joined Amazon and YouTube in a coalition seeking technology-neutral rules for streaming and live-sports distribution. The effort could improve regulatory treatment over time but is unlikely to materially affect near-term earnings. Netflix joins streaming policy coalition
• Neutral Sentiment: Some investors see historical precedent for a recovery, noting that previous declines of at least 35% were eventually followed by new highs. However, this is a historical observation rather than a forecast of near-term performance. Netflix historical stock declines
• Negative Sentiment: Wells Fargo downgraded NFLX to “Underweight” from “Equal Weight” and cut its price target to $57 from $80. Analyst Steven Cahall cited worrying engagement trends, slowing growth concerns and the risk that rising sports and event costs may pressure returns. Wells Fargo downgrades Netflix
• Negative Sentiment: Investors are also comparing Netflix unfavorably with Disney, whose diversified businesses, streaming profitability and content slate are viewed by some analysts as offering a better risk-reward profile. Weak engagement and the absence of a breakout hit comparable with “Squid Game” have intensified competitive concerns. Netflix and Disney streaming comparison

Wall Street Analyst Weigh In

Several equities research analysts recently issued reports on NFLX shares. Daiwa Securities Group decreased their price target on Netflix from $102.00 to $76.00 and set an “outperform” rating for the company in a report on Wednesday, July 22nd. Bank of America dropped their price objective on Netflix from $125.00 to $105.00 and set a “buy” rating on the stock in a research note on Friday, July 17th. Guggenheim set a $75.00 target price on shares of Netflix and gave the stock a “buy” rating in a research note on Friday, July 17th. Wedbush reduced their target price on shares of Netflix from $118.00 to $105.00 and set an “outperform” rating for the company in a research note on Friday, July 17th. Finally, TD Cowen dropped their price target on shares of Netflix from $112.00 to $100.00 and set a “buy” rating on the stock in a research report on Friday, July 17th. Four analysts have rated the stock with a Strong Buy rating, thirty-four have assigned a Buy rating, fifteen have assigned a Hold rating and two have given a Sell rating to the company’s stock. According to data from MarketBeat, the company presently has an average rating of “Moderate Buy” and an average target price of $95.99.

Netflix Stock Down 4.9%

The stock has a 50 day moving average price of $75.85 and a 200 day moving average price of $84.21. The company has a debt-to-equity ratio of 0.39, a quick ratio of 1.14 and a current ratio of 1.14. The company has a market capitalization of $298.29 billion, a P/E ratio of 22.55, a PEG ratio of 1.08 and a beta of 1.53.

Netflix (NASDAQ:NFLX) last released its earnings results on Thursday, July 16th. The Internet television network reported $0.80 earnings per share for the quarter, beating analysts’ consensus estimates of $0.79 by $0.01. Netflix had a net margin of 28.22% and a return on equity of 40.02%. The firm had revenue of $12.56 billion for the quarter, compared to analysts’ expectations of $12.58 billion. During the same period in the previous year, the company earned $0.72 earnings per share. The company’s quarterly revenue was up 13.4% on a year-over-year basis. Equities research analysts forecast that Netflix, Inc. will post 3.59 earnings per share for the current fiscal year.

Insiders Place Their Bets

In other news, insider David A. Hyman sold 5,723 shares of Netflix stock in a transaction dated Tuesday, August 4th. The shares were sold at an average price of $72.85, for a total value of $416,920.55. Following the completion of the transaction, the insider owned 316,100 shares in the company, valued at $23,027,885. This trade represents a 1.78% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO Theodore A. Sarandos sold 105,850 shares of Netflix stock in a transaction that occurred on Monday, August 3rd. The shares were sold at an average price of $73.03, for a total transaction of $7,730,225.50. Following the completion of the transaction, the chief executive officer owned 206,266 shares of the company’s stock, valued at $15,063,605.98. This represents a 33.91% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold 179,045 shares of company stock valued at $13,132,194 in the last quarter. 1.24% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Netflix

Several hedge funds and other institutional investors have recently modified their holdings of NFLX. American Capital Advisory LLC raised its stake in Netflix by 0.8% during the 1st quarter. American Capital Advisory LLC now owns 13,990 shares of the Internet television network’s stock valued at $1,345,000 after purchasing an additional 109 shares during the last quarter. CWS Financial Advisors LLC boosted its holdings in Netflix by 3.2% in the 1st quarter. CWS Financial Advisors LLC now owns 3,612 shares of the Internet television network’s stock valued at $347,000 after purchasing an additional 112 shares during the period. Warner Group LLC grew its position in Netflix by 2.2% in the 1st quarter. Warner Group LLC now owns 5,230 shares of the Internet television network’s stock worth $503,000 after purchasing an additional 114 shares during the last quarter. Financial Avengers Inc. grew its position in Netflix by 9.8% in the 1st quarter. Financial Avengers Inc. now owns 1,290 shares of the Internet television network’s stock worth $124,000 after purchasing an additional 115 shares during the last quarter. Finally, PAX Financial Group LLC increased its holdings in shares of Netflix by 2.5% during the 1st quarter. PAX Financial Group LLC now owns 4,847 shares of the Internet television network’s stock worth $466,000 after purchasing an additional 116 shares during the period. 80.93% of the stock is currently owned by institutional investors.

About Netflix

Netflix, Inc (NASDAQ:NFLX) is a global entertainment company that provides subscription-based streaming access to television series, films, documentaries and other video content. Its service includes Netflix-produced and licensed programming, with offerings that may vary by market. The company also provides an advertising-supported plan in selected countries and has expanded into mobile games and other interactive entertainment.

Netflix was founded in 1997 by Reed Hastings and Marc Randolph as a DVD-by-mail rental service in the United States.