Netflix (NASDAQ:NFLX) has rallied over 60% since my May 4, 2022 report, “Netflix: Show me the money,” compared to a -3% decline for the S&P 500 index. As a result, it is an excellent time to review the Netflix investment case. The May report opened with the following:
I am assigning Netflix (NASDAQ:NFLX) a positive risk/reward rating based on its leadership position in the global streaming market, discounted valuation, above-average growth potential, and its deeply oversold technical position coinciding with an incredibly strong long-term support zone.
The question is whether these central tenants still hold or has the risk/reward asymmetry shifted?
- A Leadership position in the global streaming market.
- A discounted valuation.
- Above-average growth potential.
- Technically oversold and near long-term technical support.
Risk/Reward Rating: Neutral
While Netflix remains a leader in the global streaming market and still possesses above-average growth potential, The Walt Disney Company (NYSE:DIS) is now the streaming leader in total subscribers. This was outlined in my recent report “Has the magic returned to Disney?” Disney’s growing leadership position exemplifies the new reality facing Netflix, which is the most competitive and challenging industry conditions since the advent of streaming.
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