Decide: Buy or Sell – Netflix vs. Tesla Earnings

Decide: Buy or Sell – Netflix vs. Tesla Earnings

Netflix’s stock might be expected to rise above $500 per share after positive sentiment, upward profit revisions, and an 11% annual revenue increase to $8.71 billion. Tesla faces uncertainty with a potential fourth consecutive earnings-reaction-day selloff, driven by margin pressure from a price-slashing strategy, and investor focus on first-quarter 2024 guidance.

Some analysts anticipate that Netflix’s stock could reach a new 52-week high above $500 per share following the release of its fourth-quarter earnings report this Tuesday. The $506 mark could be considered a target, representing the price it fell to at the beginning of 2022.

Positive sentiment towards Netflix has grown as profit estimates have been revised upward 17 times since the last earnings report. The company’s revenue is expected to increase by 11% annually to $8.71 billion, driven by the introduction of a new, lower-cost, ad-supported basic subscription tier and efforts to combat illegal password-sharing.

If the forecasted revenue materializes, it will mark the highest quarterly sales total in Netflix’s 17-year history, representing an 11% increase from the previous period to $8.7 billion.

However, this quarter’s earnings might not live up to the company’s last earnings call, which generated a ~15% bump.

Meanwhile, Tesla’s fourth-quarter update, scheduled for release on Wednesday after the close, may have a different trajectory. Tesla shares declined by 4.4% after the last earnings report, experiencing their third consecutive earnings-reaction-day selloff.

A fourth occurrence is possible, although it’s also possible that the bottom is in. It will likely come down to whether investors are disappointed in their forward guidance for the first quarter of 2024.

Tesla’s margins are expected to face pressure due to its ongoing price-slashing strategy in recent quarters. However, this might already be factored into the current stock price.

TSLA has shown a pattern of lower highs and lower lows since the peak in July 2023, and it remains to be seen if support will materialize at its support levels of $200 and $194.