Trading Nation

Netflix reports earnings, trader predicts a double-digit rally ahead


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Trading Nation: Two experts on what Netflix will report after the bell

Netflix just reported earnings.

The streaming company posted an increase of 15.8 million paid subscribers in its first quarter earnings Tuesday, far higher than expected. It headed into that report with its stock up a massive 36% so far this year, bucking the broader sell-off.

Mark Newton, founder and president of Newton Advisors, says the charts support even more upside.

"The stock actually looks quite attractive, technically," Newton said on CNBC's "Trading Nation" on Tuesday before the release. "At a time when very few stocks are above the 200 day moving average, only about 12%, not only is this one above its 200 but it's back at new all-time high territory so you know it's always good to find the stocks that are showing good relative strength during times like this."

"If anything, Netflix has become the new infrastructure play," said Newton. "Any sort of pullback in the stock down to $400 will make me want to take a look at buying into it -- $393 to $400 is an excellent risk reward to buy Netflix. So, I like it, I think it's going to push up to $480 in the months ahead and potentially up to $533 so it's one of my favorites technically on an intermediate term basis."

A move to $533 represents 21% upside from current levels. It would also mark a new record. 

Quint Tatro, president of Joule Financial, expected strong subscriber growth for Netflix with so many consumers stuck at home during the coronavirus lockdowns. However, after its steep run, he fears that good news has already been taken into account.  

"They've been a huge benefactor of everybody staying at home," said Tatro during the same segment. "But the stock has already been priced in, in our opinion. This move, it's up 30% year to date. It's been a hiding spot for managers, and we honestly would take any strength after this announcement to be a seller of the stock if somebody invested in and owns this name here."

Netflix shares were slightly higher in after-hours trading.