Netflix, Inc. Saw Significant Option Trading On Monday

Netflix, Inc. Saw Significant Option Trading On Monday
NFLX Photo by Matt Perreault

Netflix, Inc. (NASDAQ:NFLX) shares witnessed large options trading on Monday as investors purchased 29,623 put options on the company (owners of put options make profits if the company share price goes down). This represents an increase of around 120% compared to the average daily volume of 13,495 options.

2014, a mixed one for Netflix

2013 was a good year for Netflix with shares moving up and subscriber base increasing by 33%. However, 2014 has been a mixed bag for the streaming company with shares down around 30% over the last three months.

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The firm announced strong subscriber growth in October, but the growth rate was not in-line with consensus analyst expectations. The company performed better than the market before reporting its earnings in October. From January till the beginning of October, Netflix surged around 20%, compared to 5% for the S&P in the same period.

Netflix is a strong company, which it showed when it added 3 million new members in the third-quarter, This brings the firm’s total to around 53 million users, which is not bad even if forecasts were closer to 3.7 million in subscriber growth.

Analysts bullish

Growth is expected to be strong for Netflix, and the company is estimating 4 million subscribers will join in the fourth-quarter, with over half of the additions coming from overseas as the streaming company is expanding its international operations. Revenue surged at around 21% in fiscal 2013, but for 2014, the spike is expected to be 25%. Such an acceleration in the top line clearly suggests that the streaming company is expanding and growing.

Despite the earnings miss and other concerns surrounding the company, Netflix is in growth mode. “With negativity priced in but NFLX still humming along, now could be a bargain buying opportunity,” says a report from MarketWatch.

Recently, a number of analysts have assigned a rating to the stock. Stifel Nicolaus downgraded Netflix from a Buy to a Hold rating in a research note to investors on November 25th. They have assigned a price target of $380 on Netflix shares. Zacks analysts maintained their Neutral rating on the stock in a research note to  investors on October 17, and assigned a price target of $380. The Street analysts lowered their rating on Netflix from Buy to Hold in a research note to investors on October 15th. Overall, Netflix has an average rating of Buy and a consensus target price of $454.73.

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