Netflix, Inc (NASDAQ: NFLX) will kick off big tech earnings on Tuesday when it prints its fourth-quarter financial results after the market close.
The stock was trading near flat heading into the event, in tandem with the S&P 500, which was consolidating mostly sideways after reaching a new all-time high of 4,868.41 on Monday.
After the streaming giant printed its third-quarter results on Oct. 18, the stock surged over 16% the following day and subsequently entered a steep uptrend on larger time frames, which brought Netflix to a high of $503.41 on Jan. 11.
For the third quarter, Netflix reported earnings per share of $3.73, beating the Street estimate of $3.49. The company reported revenues of $8.54 billion, which beat the $8.53-billion consensus estimate.
For the fourth quarter, analysts expect Netflix to report earnings per share of $2.22 on revenues of $8.719 billion. Traders and investors will be watching closely to see whether Netflix has been able to retain its client base and gain additional users.
From a technical analysis perspective, Netlix’s stock looks neutral heading into the event, having filled an overhead gap but trading in an uptrend on the daily chart.
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.
Options traders, particularly those who are holding close-dated calls or puts, take on extra risk because the institutions writing the options increase premiums to account for implied volatility.
More experienced traders who wish to play Netflix, combined with several other mega-cap stocks, may choose to do so through the Direxion Daily NYSE FANG+ Bull2X Shares (ARCA: FNGG). The fund seeks daily investment results, before fees and expenses, of 200% of the performance of the NYSE FANG+ Index.
Netflix is the seventh largest holding within the fund, weighted at 9.92%.
It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to long-term investments.
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