Netflix: Time to Cash Out?

by Sam Collins | April 23, 2013 1:57 am

Netflix (NASDAQ:NFLX[1]) — On Dec. 5, with the stock trading at about $87, following the announcement of an exclusive U.S. subscription TV service for Walt Disney (NYSE:DIS[2]), I recommended it[3], saying:

“The break from the saucer provides a short-term trading opportunity to the top of the open gap made in early April at $90 to $101.79. I’d prefer to buy NFLX under $80 for that trade, but long-term investors may want to go for this hot issue now, at the market, for the potential offered by this combination of leaders in the world of household entertainment.”

On Monday, after the close, Netflix beat earnings expectations, reporting Q1 earnings of $0.31 a share versus a loss of $0.08 in the year-ago period. The company forecasts earnings of $0.23 to $0.48 for Q2.

The stock soared in after-hours trading, and while this represents a solid turnaround for the company, it’s also an excellent selling opportunity for those who bought the stock in December at $87 and are now sitting on a profit of over 100%.

For those who wish to continue to hold the stock, a stop-loss order below the support line at $159 would preserve a profit if triggered, but provide an opportunity to book a larger gain if the stock continues higher.

04 23 13 nflx 300x200 Netflix: Time to Cash Out?
Click to Enlarge

chart key 300x84 Netflix: Time to Cash Out?[4]

Endnotes:
  1. NFLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=NFLX
  2. DIS: http://studio-5.financialcontent.com/investplace/quote?Symbol=DIS
  3. I recommended it: http://investorplace.com/2012/12/trade-of-the-day-netflix-nasdaq-nflx-2/
  4. [Image]: http://investorplace.com/wp-content/uploads/2011/04/chart-key.gif

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