Why traders love Netflix despite a likely earnings miss – eToro tips & picks
As US earnings season starts to heat up, there are a whole host of opportunities this week for traders. A notable example is Netflix, the online streaming service, which reports its earnings tomorrow. By all accounts, we are not expecting blockbuster numbers. The company has been aggressively expanding into different regions and the cost of doing so is hitting the bottom line.
Netflix’s expansion programme is well underway, and the company is on track to hit its target of expanding into 200 countries by the end of the year. Further, the popularity of its self-generated original content, such as House of Cards and Orange is the New Black, has seen the company look to build on this base by pushing into Hollywood and original movies. But even founder Reed Hastings has been quoted as saying that he expects losses on the back of this rapid growth.
This has fallen on deaf ears on the eToro OpenBook, however, with 100 per cent of clients trading on this stock bullish and looking for longer-term gains from a company that has performed so well in the last few years. There is another reason for this popularity from a technical point of view: the old adage of the trend is your friend has never been so relevant. The stock has more than doubled in value since the start of the year, despite the odd pullback, and each pullback is met by those looking to buy the dips. All in all we maybe expect earnings to miss slightly, but the expectation that the miss will be put down to aggressive expansion is likely to mean that eToro clients remain 100 per cent long on Netflix.
| EToro popular investor: Noa Strijbos |
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The Greece saga may now finally be coming to an end, but I think the Eurozone is still too divided and, in many ways, this makes the dollar the far more attractive proposition at the moment.
I think the way the Eurozone has handled the Greek situation is proof enough that the single currency is in for a very uncertain future. However, with the potential for a rate hike in the US in September, we must be careful not to overplay the positivity in the greenback and the US equity markets.
I liked Fed Chair Janet Yellen’s speech where she gave great advice for young women in the financial world. There is no better time to seize the opportunities out there for success.
I will keep trying to do the best I can on the eToro platform, so feel free to come and join me.
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