Key Points: 

  • Shares of Netflix are down 35% in trading the day after reporting a loss in subscribers.
  • This is the largest drop post-earnings since 2014.
  • Bill Ackman lost over $400 million on his position.

On Tuesday Netflix reported a loss of 200,000 subscribers during the first quarter which sent the stock down over 35%.

This was the biggest drop surpassing Netflix 2014 earnings which saw the stock drop over 26% in trading for almost a similar reason. Netflix is forecasting global paid subscriber loss of 2 million for the second quarter citing slowing revenue growth.

The company also said that the Netflix boycott of Russia resulted in a loss of 700,000 subscribers. In addition, they cited growth from other streaming companies. Netflix performed well during Covid-era as many new shows were produced and with people locked in watching Netflix was one of a handful of things to do.

But that has changed and with that so have the technicals on Netflix which are discussed below.

Billionaire Hedge Fund Manager Bill Ackman lost over $440 million on his Netflix position that his firm, Pershing Square, just bought three months ago. He had this to say about Netflix Earnigs Report.

“While Netflix’s business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty.”

The technical take on Netflix after earnings is that the $200 level is likely to be support of some kind. The stock traded there in 2018 and it might become a psychological level for traders. The upside resistance looks to be $250-$260 on this name and can be for the forseeable future as Netflix CEO Reed Hastings already guided subscriber loss going forward.

The real concern aside from the earnings miss is the amount of selling the stock has seen so that $200 support level on Netflix really should be an area of interest or it could see much lower. The next Netflix Earnings report is not until late August so we’re going to see how investors react until then.