Thinking of subscribing to the bull theory on Netflix (NFLX)? Here’s my take. (July 17, 2017)
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Netflix ( NASDAQ:NFLX ) reported some monster subscriber growth after the close. Their earnings missed by a penny but nobody gives a rip. Revenues were solid, but the big is, subscriber growth. It is kind of l like Jack Ma at Alibaba ( NYSE:BABA ) talking about all the good stuff that they have got coming up. People hear that and they just want to buy the stock; but we are looking at Netflix ( NASDAQ:NFLX ) today.
Here is the thing, we saw this stock the last time. The last time they reported earnings, the stock jumped up 15 percent and then ran essentially 30 percent. We see these instances where the stock just jumps up and then it keeps going. Even here the stock jumped up a bit, it ultimately flattened out, but you can see I don’t need to give you a play by play of what happened over the last several months. Essentially, the company reports earnings that people like and the stock doesn’t reverse. I will put it a different way, it is not seen as a selling opportunity, got to take profits, lets dump this thing on unsuspecting investors. This is not a Snapchat ( NYSE:SNAP ) thing. This is not an Uber thing. This is a Netflix ( NASDAQ:NFLX ) thing. This is what this bad boy has looked like. This is a stock that, frankly, you want to stay long on. I just can’t say that I would buy it right here, not when it is really knocking right at the door of $180.00.
What we are not seeing right now in this price, you can see when I am doing this video, what we are not seeing yet are all of these analyst’s upgrades. I don’t know why CNBC doesn’t do it anymore, the whole penguin thing, I always loved that. I think they didn’t do it because a lot of the investment banks are advertising on CNBC and some of them told them to knock it off. Where all the analysts are upgrading on the same thing, doing the same thing at the same time, because the stock did something that they didn’t foresee. It is like the ‘Flight of the Penguins’ always jumping in at the same time. Those of you old timers, you know what I am talking about. We haven’t seen the upgrades yet.
I can foresee this stock gapping up even to $180.00 tomorrow. The only thing that I would tell you is, that it is always a risk to buy a stock that is up this much. Here is one of the truer things that you are ever going to hear, this is an easy one for me. By getting in right at the market open you are not getting in ahead of anybody else. Don’t think, “I have got to buy this thing right at the open before everybody else does.” Dude, everybody knows when the opening bell rings, it is at 9:30. Don’t be in with that crowd. Even if you ultimately wind up buying the stock at a higher price, trust me on this, professionals will not be buying this stock tomorrow. Not in the morning. Not that you would know it, but you are not going to see some big money manager who has been waiting to get into Netflix ( NASDAQ:NFLX ). First of all there are not that many of them around anyway, that have been waiting to get into Netflix ( NASDAQ:NFLX ) but is not in yet. They are either already in or they are saying, “I can’t buy that stock because it is too expensive.” There not going to be that many folks running big money that are going to buy Netflix ( NASDAQ:NFLX ) tomorrow morning, other than hapless short sellers.
So don’t get on the side of that trade first thing in the morning and buy. Let the stocks settle out and see if it pulls back below 180.00. I am kind of thinking that it will, but take that for what it is worth (this is a free video so you know how much it is worth). That would just be my guess. If the stock gaps, though, above 180.00 and stays there, then for you active traders this could be a breakaway gap. Set your time frame. Are you trading it for the first 15-minutes of the market? Or are you trading it for the next 15 months? If it is the next 15 months don’t be buying it. Even here, the stock ultimately came in some. If you are trading it for a shorter period of time use the 59-Minute Trader tactics that I show you so that you that you can stay on the right side of the gap. I am serious when I say this, don’t just reflexively short this stock because it has gapped up so much. Sometimes that works. It worked well here. It has worked well in the past for a few percentage points. But generally speaking, on stocks like this, your only real question is whether you buy it or whether you just stand aside. And if you own it whether you just kind of want to sell into the strength. You don’t want to just be reflexively shorting this stock until you know where the top is so you can put in a buy stop in just a little bit above the level.
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