Netflix Moves Lower Day After Downgrade; Move To 'Old Lows' Seen As Technically Possible
Netflix, Inc. (NASDAQ:NFLX) shares are continuing lower one day after Baird analyst William Power downgraded his rating on the company to Neutral. Power cut his price target on Netflix to $115 Monday; shares are near the $107 level on Tuesday morning.
The stock hit $126 as recently as December 8, and closed 2015 as one of the year's most successful investment ideas.
"While we remain positive on the company's positioning and long-term growth prospects, key risks include international execution, content costs, and rising competition," Power said in Monday's note. He added that any potential beat in international subscribers could be priced into shares already.
Lower Prices Could Be Coming, Says Todd Gordon
In an interview with CNBC on Monday, TradingAnalysis.com's Todd Gordon said a move to "old lows" near the $96-$97 range is possible. "We're going to use this as a ceiling to sell," he explained.
To play any potential downside, Gordon said an options call spread is a potential idea. He is selling February 110-strike calls for $2.15 and buying February 115-strike calls for $2.85, according to CNBC.
"By selling calls above the market and above resistance, you have a high probability of success for the trade to work, better than 60 percent," he concluded.
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