NFLX Analysis: Is This the End of the Netflix 1-month Stock Rally?

FXOpen

Video and movie streaming giant Netflix has been enjoying bumper values over the past month, with its share price having been rising substantially over a sustained period.

In fact, with just one or two very minor blips along the way, Netflix share prices have been rising steadily since the middle of March this year.

To give some indication of the magnitude of this upward surge, on March 22 this year, Netflix shares were trading at USD 293.90 per share on the tech-orientated NASDAQ exchange on which they are listed.

By June 15, Netflix shares were up to USD 445.27 per share, with a steady chart pattern over the past three months pointing gradually upwards.

That is quite a climb, which became even more substantial in May this year when Netflix announced that it would place restrictions on the number of screens that can be logged in at any one time, in order to preserve its revenue by limiting the opportunities for people to share their passwords with non-subscribers.

This resulted in a sudden surge in customer acquisition for Netflix, presumably because those who had been enjoying a ‘free ride’ by using the access credentials of friends or family have now had to register their own subscription in order to continue using Netflix.

Indeed, Antenna Group, which is a market intelligence organization for the subscription services industry, produced statistics that showed Netflix having experienced the four single largest days of U.S. user acquisition in the four and a half years that Antenna has been measuring the streaming service.

Dynamics such as this tend to bolster the value of stocks, especially among companies whose product is provided online. Protection of intellectual property to the extent of ensuring that it cannot be accessed without subscription is vital to the value of an online business.

Interestingly, on May 26 and May 27, approximately 100,000 new customers joined Netflix in the United States, causing a similar spike in new customer acquisition to that created in March 2020 by the announcement by many Western governments that they were engaging in locking down workplaces and entertainment venues to the extent that many people were at home with Netflix for entertainment.

This upward surge in value continued past the crackdown on password sharing, however, and reached a peak last week.

Today, however, for the first time in over a month, a slight downward movement has begun to appear, with today’s value at USD 431 per share, which, although very high compared to 3 months ago, is significantly down from the USD 445 on June 15.

Will this signal the end of the big rally for Netflix, or is it a minor blip?

There is no negative news associated with Netflix, and no announcements on the horizon.

Has it run its course and people are now being conservative, or is it just a small blip before getting back on an upward track?

The only way to find out is to follow the chart!

Indicative pricing only

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