Is it time to press play on Netflix?
With two-thirds of major Wall Street analysts in the bullish camp, according to FactSet, expectations were high heading into the streaming giant's third-quarter earnings report on Tuesday after the bell.
The results, however, disappointed investors. The company missed estimates on both earnings per share and subscriber growth, with only revenue coming in slightly higher than expected. Shares of Netflix fell nearly 6% in after-hours trading Tuesday in response to the report.
Still, the shares have climbed about 64% this year as stay-at-home orders propelled the company's subscriber growth amid the coronavirus pandemic. The stock has struggled to push higher in recent months, however, down about 4% since mid-July.
"On a technical basis, the stock is trying or it's moving up towards this $550 level, which has been unbelievably important resistance all summer long and now into the fall," Matt Maley, chief market strategist at Miller Tabak, told CNBC's "Trading Nation" on Tuesday.
Netflix's stock closed at $525.42 on Tuesday.
"If it can finally break above that 550 level in any kind of meaningful way, it's going to be very, very bullish," Maley said, pointing to a chart of the stock.
For Maley, Netflix's breakout potential hinges on how long the stay-at-home story lasts, particularly with coronavirus case counts ticking up in certain countries.
"If it fails and it rolls back over and breaks below the 510 level — that's its trend line going back to March — it probably means it's going to go down and test the summer lows down in the mid-400s," he said. "I'm looking at 550 to the upside, 510 to the downside. Whichever way that is broken will lead to a very big move in Netflix. So, still look for a lot out of this stock before the year is out."
Mark Tepper, president and CEO of Strategic Wealth Partners, said that with winter fast approaching and new coronavirus flare-ups, streaming should continue to hold strong.
"Whenever Netflix had a bad quarter in the past, it was because of churn. But in my opinion, nobody's really canceling their Netflix subscriptions right now," Tepper said in the same "Trading Nation" interview.
Beyond that, Netflix's guidance for net paid subscriber additions was "very conservative," Tepper said, adding that he expected the company to add some 3 million net paid subscribers versus its 2.5 million estimate. Instead, the company added some 2.2 million subscribers in the third quarter.
"Look, movie theaters are dying. Who knows if they'll even be a thing in five years? I think you're going to see more and more of these movies go straight to streaming," Tepper said.
"Last thing I want to say is Netflix's pricing power is getting stronger," he said Tuesday. "Cowen actually runs a proprietary survey and the percentage of respondents who said they would pay more for a subscription has gone from 48, I believe, percent at the end of last year up to 53% today. That's very strong and that's good for the stock."
Disclosure: Strategic Wealth Partners owns shares of Netflix.