Streaming stocks have gone in and out of favor with the market over the past few years. Today, Wall Street analysts have conditioned investors to focus on metrics like total subscriber count.
The past year has seen the major streaming platforms find ways to crack down on password sharing. And that’s created more account users. However, that’s not always the best way to maximize earnings.
Despite beating on subscriber count and earnings, Netflix (NFLX) saw shares drop off. Part of the reason is the current market correction.
But Wall Street also doesn’t like that the company will stop reporting its subscriber data after 2025.
To some extent, that data does give a sign of total customers. But it doesn’t get to the company’s revenues or profits per customer, which may be a better metric for determining the success of a streaming company going forward.
Action to take: Investors may want to look to buy Netflix in the coming weeks. Shares may still trend lower for a bit, and the market’s current weakness suggests a bit more downside ahead.
For traders, the July $500 puts, last trading for about $15.00, likely have some low-double-digit upside in the coming weeks on any further weakness for Netflix shares.
After that, traders will likely want to flip to call options to play the rebound.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.