What’s your take on Netflix (NFLX) going into earnings next Monday? Here’s mine.
Discussed in this article: Netflix Inc. ( $NFLX )
I just want to take a quick look at Netflix ( NASDAQ:NFLX ). The company announces earnings on Monday the 22nd; I’m really looking at this stock. I have a long position in this stock and will ride it right through earnings, because I have a longer view of the company. But if you want to look at a short term trade, over the next couple of days, I think you want to be long Netflix ( NASDAQ:NFLX ).
The trend is higher, the stock has been in this volatility squeeze for a while and it pushed out to the upside. I don’t really see any particular reason, over the next couple of days between now and when earnings were announced, I don’t see any reason why the stock’s going to have some massive reversal or reversal of any note at all, because the stock had been trading in this pretty tight trading range for quite a while.
So it’s not as if all these folks that bought in the box are all of a sudden going to be rushing to take profits. I mean just move the decimal point over one to the left, it’s like you bought at 23.00, now the stocks up a 27.00 or so. Are you really going to take profits on a $4.00 move in a stock? No, you’re not. You bought the stock because you think it’s moving higher; $4.00 is not going to get you to sell.
So what I’m saying is there’s really no reason for profit taking to knock this stock down over the next couple of days, so I would suggest being long this stock. You can decide at the end of the day on Friday or even Monday, because the company announces after the bell on Monday. I think this stock’s going to continue up for the next three trading days, between now and the end of the day on Monday.
At that point you’ve got to make your decision, you need to know right now, are you holding this stock as a long-term position or are you holding it as an earnings run? If the stocks up much higher than it is right now then you go ahead and take your profits, take some off the table take it all off or at least take some off because your whole reason for being in the trade was because you thought the stock would continue up into earnings. If that’s your reason then at the end of the day, on Monday, you need to be taking your profits.
On the other hand, if you think the stock is going to continue running through earnings, that’s whole other deal, that’s a Fitzpatrick thesis, which is also a longer-term view. So as long as you know what your opinion is, why you have that opinion, then all you’ve got to do is look at the direction of the stock to tell you whether you’re right or wrong.