Netflix stock rose to the highest levels since the middle of October. Is the stock gaining in line with the overall market rebound, or is there something more here?
Why is it important?
Video streaming services have been rapidly developing during the last several years and Netflix is definitely a flagship in this area. The further we go, the fiercer the competition becomes.
Netflix is currently facing a very big challenge posed by the merger of Disney and 21st Century Fox. The deal officially closed on Wednesday. Moreover, Disney plans to launch its streaming service sometime this year. Another player to join the streaming battle is Apple, which has the installed base, control over the platform, and ample amounts of cash.
On the upside for Netflix, the union between Disney and Fox is not a piece of breaking news. The threat it represents for Netflix may be very much priced in its stock. The company definitely has no intention to give up or slow down. Netflix is actually ready to counterweight Disney with its own titles.
For example, yesterday Netflix released a trailer for the long-awaited third season of Stranger Things. Its stock gained 4.6% on the announcement. In addition, Netflix is putting an effort into creating content outside of the United States. This strategy works well to increase the number of viewers both abroad and at home.
As a result, there are reasons to believe that the increased competition will make Netflix even stronger than before. Unlike the newcomers to the streaming industry, Netflix has the experience and the ability to experiment. So, do we like Netflix? We do!
The technical picture for the stock looks positive. The next level to watch on the upside is the October high in the $387 area. On the downside, support lies at 359.00.