Netflix shares have been on a strong rally following the stock split and the news about the company’s revised maternity leave policy. In addition, a bullish flag pattern can be seen on the 1-hour time frame, signalling that the stock could be in for more gains.
The 100 SMA is above the longer-term 200 SMA on the 1-hour chart, confirming that the uptrend is likely to stay intact. However, RSI is on the move down, which suggests that selling pressure is building up. On the other hand, stochastic seems to be renewing its climb, hinting that buyers have enough strength to push for rallies.
A selloff could last until the area of interest near the 100 SMA, which has held as a dynamic support level in the past. Meanwhile, an upside break past the $130/share level or short-term consolidation resistance could confirm that Netflix shares are ready to climb.
Netflix Shares Outlook
Some analysts say that Netflix shares are heavily overbought and inflated at the moment, as it is not very clear what’s driving the sharp uptrend. Price got a boost from its parental leave policy adjustments announced a few days back, which would would now grant unlimited leave to both mothers and fathers, with full pay within the first year after their child’s birth or adoption.
In a statement released late Tuesday, Netflix said employees can take as much time within the first year as they choose, earning their normal pay during leave. The company already offers an unlimited time off policy.
Apart from that, better than expected earnings has allowed Netflix shares to keep soaring. Earnings per share (EPS) of $0.06 beat expectations by $0.02. Revenue of $1.64 billion was a bit shy of the $1.65 billion forecast but it was still up 22% year over year. Reports that insider trading is taking place might wind up weighing on stock price later on, as independent director Leslie Kilgore sold 77,959 shares for $8,935,228 through eight transactions on August 3- 4.