- The Walt Disney Company (DIS) may have a fumble of its own during the second quarter.
- fuboTV (FUBO) sets up as a bet on the underdog proposition in streaming stocks.
- Spotify’s (SPOT) price chart is telling bulls to listen, but position wisely.
Wall Street’s bad actors have been everywhere this year. Now, it is earnings season’s turn. And nowhere is the spotlight being shined more intensely than on Netflix (NASDAQ:NFLX) following the streaming video giant’s first quarter, a NFLX stock shocker.
The rollout of earnings season over the past week has largely failed to move investors with any dramatic authority. But Wednesday’s tumble of 35% in NFLX stock has added another name to the list of inflation, interest rates, Russian conflict and Covid-19 villains hanging over the market.
In brief, Netflix shares have been slammed to four-year lows after the company announced a surprise loss of 200,000 subscribers and warned of more trouble ahead. It is the first such subscriber decline in more than 10 years. Worse, NFLX stock is now prepared to see a global paid subscriber loss of 2 million next quarter.
Management pointed fingers at inflation, password sharing, competition and even the conflict in Ukraine as key factors attributing to the dismal performance. Beneath the surface and more certain, these three ‘NFLX stocks’ in contention for “best dramatic sympathy performance” are ready to trade.
These are my top three picks for ‘NFLX stocks’ to fill your streaming service investment needs:
| DIS | The Walt Disney Company | $124.93 |
| FUBO | fuboTV Inc. | $5.23 |
| SPOT | Spotify Technology | $122.96 |
NFLX Stocks to Trade: Walt Disney Company (DIS)
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The Walt Disney Company (NYSE:DIS) is the first of our ‘NFLX stocks’ to trade.
The House of Mouse still has another couple weeks until it reports on May 11. Shares are down nearly 5% in sympathy with Netflix. Investors are worried its cash cow ESPN unit could help produce an earnings fumble for the entertainment giant.
Looking at the extended monthly chart of DIS stock, the observation is that today’s concerns could be the start of further downside pressure on shares.
Technically, this ‘NFLX stock’ is trading narrowly below its January and March bottoming candles. DIS has attempted to find support off a longstanding trendline and band of long-term Fibonacci levels dating back to 2012. And while support hasn’t failed just yet, today’s fear doesn’t look misplaced.
With stochastics oversold but still bearishly crossed, a Bollinger band starting to turn lower and a rather large broadening pattern whose support comes in just below $100, this ‘NFLX stock’ is no laughing matter. Bulls should look to shore up downside exposure today.
Alternatively, as a blue-chip company in which accumulating on weakness has historically been a good strategy, a DIS stock collar offers longer-term investors that sort of reduced risk opportunity.
fuboTV (FUBO)
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fuboTV (NYSE:FUBO) is the next of our ‘NFLX stocks’ to trade.
Streaming live sports upstart FUBO is set to release its quarterly results on May 5, but today, shares are on the defensive by 6% in the wake of the Netflix fallout.
Intraday, the small-cap has rebounded about 5% off its session low of $5.02. Based on FUBO stock’s monthly price chart, there is reason to bet on this underdog and for investors to go long today.
Technically, Wednesday’s low price in this ‘NFLX stock’ has shares challenging their Covid-19 bear market low. And given FUBO’s punishing plunge from a high of $62.29 in December 2020, it is a long-term double bottom pattern where the reward vastly outweighs the risk.
With stochastics on the verge of an oversold bullish crossover, now is the time for bullish investors to get on the field with a long bull call spread in this ‘NFLX stock’ sympathy play. But for a stronger offensive game with an ironclad defensive line, I’d suggest making a play deep into this year’s second half with the Nov $8/$12 call vertical.
NFLX Stocks to Trade: Spotify (SPOT)
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Spotify (NYSE:SPOT) is the last of our ‘NFLX stocks’ to trade.
The world’s largest streaming music and podcast play is set to deliver its first-quarter results a week from today. At the moment, SPOT shares are winning the best supporting actor award with its 10% plunge. But panicked investors could be getting ahead of themselves.
For one, consider this ‘NFLX stock’s’ solid year-over-year revenue strength of 24% in its most recent quarter on the back of Joe Rogan and a growing podcast business.
Also, Spotify’s vastly reduced earnings loss last quarter and positive free cash flow are reasons to be upbeat on this ‘NFLX stock’. And on the price chart, bulls might appreciate a prolonged bear market that is now forging a double bottom Covid-19 pattern as an opportunity.
But let’s be smart about this ‘NFLX stock’s’ chances for a recovery. Despite its fourth-quarter beat, a drop of nearly 17% in SPOT stock was ugly. And given this month’s very shaky double bottom confirmation, I don’t see the need to buy shares on further weakness. A failure could quickly put Spotify shares at all-time-lows.
For more advanced options traders, a reduced size, long July $135 call / May $150 call diagonal is a favored way to trade this ‘NFLX stock.’
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
