Fundamental Analysis: NFLX - DIS - SPOT
Is the constant growth of streaming services an investment opportunity? - What company presents the best balance of financials, competitive advantage and business environment?
There was a bullish reaction to Netflix’s earnings report last week, Spotify is trading at all time highs as Netflix, and Disney is trying to demonstrate a sustainable bounce for investors. This is a good moment to analyze these companies.
I’m pretty sure you consume less traditional (linear) TV and Radio than ten years ago, most of the content you consume may come through a streaming service like Netflix, Spotify, Disney or similar platforms. That growth is interesting to understand from the fundamental perspective, and focusing on the companies that are dedicated to entertainment; other like Amazon (Amazon Prime) was covered in previous editions, and Apple (Apple+) will be covered very soon when its earnings are reported.
Before the deep dive, a note about the market:
Some weekly setups are showing confirmation signs, as the one for MSFT, with a potential bounce anticipated last Saturday, Tech is confirming the weakness analyzed, META is falling as expected, AAPL is validating the bearish MACD, and GOOG not surprisingly is printing another weekly gravestone that found rejection in the 20 weekly average once again.
Watch out the toppy weekly candle in formation above the Bollinger band, and at the same way, be mindful about a potential bounce in Small Caps considering today’s price action with a candle nearing $215, a key support level.
Regarding SPX: First of all, the bullish target could be considered reached as mentioned during the weekend, missing only by 7 points, $5885 was shared in the weekly compass weeks ago despite of all the bearishness around there. This week the central level has had choppy price action as anticipated last Saturday, and the educational content about Support and resistance levels provided some references to set tight exit levels (based on $5849) or giving more oxygen to price action using $5819 (which acted as support yesterday). Both levels were broken already, so both conservative and more risk tolerant references have been breached.
See again the S/R levels, $5775 acted as a bouncer zone today and the 4 hours chart shows a bullish hammer, here is what some traders would do (this is no financial advice):
Buy the bullish hammer setting stops using $5775 as a reference
Stay out until the central level $5849 is recovered by the close of a 4H candle (not a doji, shooting star or reversal ones).
Stay out until the well anticipated $5885 is reached with conviction.
Stay out expecting further declines until a solid bullish reversal setup is printed in the daily, and if there is a bounce, consider plans 2 or 3.
None is guaranteed, but all of them follow a plan and correctly implemented they all work. If you bought when the bullish reversal was triggered in the August selloff (I posted a special edition on that Sunday night of the crash in Japan anticipating the bounce), or during the pullback in September, there are gains that allow you to take decisions with serenity.
Same principles apply to all the other securities presented in the S/R levels edition.
Make sure to install the chat, in weeks like this one (not every day) I can post the daily charts with S/R levels mentioning the weekly setups preceding the price action. Something that I don’t do in social media or in Substack notes.
Regarding Streaming:
Netflix chose not to invest heavily in live sports, believing it would be too costly. Instead, it focused on building its business organically without relying on pre-existing content or traditional media connections, that strategy is working. How is the cash flow? the net margin? the revenue evolution? what are the bullish and bearish factors. All that information is here for Netflix, Disney and Spotify. Let’s begin:
Netflix is a leading global streaming entertainment service with over 280 million subscribers across more than 190 countries. It provides a vast library of high-quality original and licensed movies and TV shows, accessible on internet-connected devices such as TVs, computers, and mobile devices. Subscribers can enjoy their favorite content through both subscription and ad-supported plans.
Business Context: