Netflix Stock Is Flashing This Key Sell Signal

Netflix (NFLX) stock tumbled after a news report said the streaming video leader has cut prices in more than three dozen countries in the face of growing competition. As a result, Netflix stock flashed a key sell signal.

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On the stock market today, Netflix stock fell 2% to close at 317.15. On Thursday, after the news report, Netflix stock dropped 3.4% to close at 323.65.

With the move lower, Netflix cut below its 10-week moving average line, according to IBD MarketSmith charts. A drop below that critical support level on heavy volume is a warning sign, based on IBD trading principles.

The decisive close below its 10-week line on Friday is a key sell signal.

Through Wednesday’s close, Netflix stock was up 13.6% for the year.

Netflix Stock Reacts To Price Reductions

Early Thursday, the Wall Street Journal reported that Netflix had reduced the cost of its service in more than three dozen countries in recent weeks. The targeted countries are in the Middle East, Africa, Eastern Europe, Latin America and Southeast Asia.

In some of those markets, Netflix slashed the cost of its service in half, the Journal said.

In a note to clients, Wells Fargo analyst Steven Cahall said Netflix could be cutting prices in more than 100 countries, though not in North American and Western Europe. The unaffected regions have higher average revenue per subscriber. Netflix operates in more than 190 countries and territories.

“Ampere Analytics says the change could affect more than 10 million subscribers or about 4% of its sub base,” Cahall said. “The price drops vary by country, but most territories are seeing prices fall by 20% to 45%.”

Netflix ended 2022 with 230.75 million streaming subscribers worldwide. Of those, 32% are in the U.S. and Canada.

NFLX Stock Tops Industry Group

Netflix stock jumped after the internet television network posted fourth-quarter results on Jan. 19. The Los Gatos, Calif.-based company reported more new subscribers than expected, adding 7.66 million members vs. views for 4.57 million.

However, Netflix missed Wall Street’s sales and earnings targets for the fourth quarter and gave a mixed outlook.

Netflix stock ranks first out of 21 stocks in IBD’s Leisure-Movies & Related industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 91 out of 99.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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