Netflix sees dip in US streamer growth

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By :  ,  Financial Analyst

Netflix shares are in a holding pattern ahead of next week’s earnings

A rise of 1.6 million U.S. subscribers is expected, 30% below the first quarter of 2018. Netflix is cautious on Q1 after aggressively hiking North American prices late last year. International subscriber additions should be bigger, with a 22% rise to 7.3 million forecast. Netflix sees U.S. growth rebounding in the second half, so Q2 guidance will be crucial.  After a sprint of over 30% so far this year, shares could be hit if Netflix pegs Q2 revenue lower than Wall Street’s $4.51bn forecast, up 7.9%.

Given muted expectations for the quarter, it’s unsurprising that after a chunky run into February, NFLX has hovered in a narrower range. True, proven 61.8% Fibonacci support—in February and at the beginning and end of March—suggests medium-term holders are in control. But evidence is emerging of descending trend line resistance since last June, most recently tagged in March. Notwithstanding the short but valid rising line since early March, holders need an upside break out from the symmetrical triangle formed by the two trends to signal that NFLX can resume its rise. A failed break higher would bring the 61.8% Fibonacci and observed support of 348.3 back into view. Below these and the (slightly retreating) 200-day average, the optimistic uptrend so far this year would be at risk.

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