The once-dashing tech giant NetflixNFLX -1% has recently reported bad news. Three million subscribers were lost to the streaming service in the first half as well-heeled competitors entered its market (Disney Plus, AmazonAmZN +0.2%AmZN +0.2% Prime).
Although it expects to start gaining paid viewers again in the third quarter, that projection was lower than Wall Street anticipated. This year, the company was nominated for fewer Emmys than rival HBO. The company laid off a significant number of employees.
This company’s stock is down 62% in 2022, which is unsurprising. Undoubtedly, Netflix shares have suffered in 2022, down over 60%. Share performance has been adversely affected by a slowdown in subscriber growth. The company has achieved four consecutive top-line beats.
Reason to avoid
It is forecasted that Netflix’s bottom line will decline by nearly 11% in FY22, but earnings should rebound in FY23, with the Zacks Consensus Estimate of $10.06 highlighting an upward trend of 9%.
Why is an excellent stock to buy
A 6.6% increase in revenue is expected for NFLX in FY22 from FY21’s $29.7 billion, which was a 6.6% decrease. Additionally, FY23 is projected to show an increase of 7.3% on the top line.
Shares of Netflix trade at much more reasonable valuations after the sell-off. 22.4X is a fraction of the 82.1X median five-year forward earnings multiple. S&P 500 shares trade 19% higher than S&P 500 shares.
In this case, NFLX shares are trading at 224.90, while Netflix stock is trading at 199.09, so it is a Buy. A 50-day simple moving average for NFLX is 191.00, while its share price is 224.90, which means it is a buy from a technical perspective.