Netflix stock slips below 200-day MA: here's why Josh Brown still favours buying

Netflix (NFLX) shares have declined nearly 20% from their year-to-date high, falling below the 200-day moving average after Q3 earnings missed expectations due to a Brazilian tax dispute. Despite this technical signal, prominent investors like Josh Brown and Paul Meeks view the dip as a compelling long-term buying opportunity, citing Netflix's robust content pipeline and expanding ad revenue. Historical data supports this outlook, showing that similar breaches of the 200-day MA have often preceded significant rebounds, with average gains of 17% in six months and 25% in twelve months, aligning with Wall Street's consensus "overweight" rating.

Analysis

Netflix (NFLX) shares have declined nearly 20% from their year-to-date high, falling below the 200-day moving average following a Q3 earnings report that featured in-line revenue but lower-than-expected earnings due to a Brazilian tax dispute. This technical breach, coupled with five consecutive sessions of decline, typically signals caution for short-term traders.

Despite the technical breakdown, prominent investors like Josh Brown and Paul Meeks view the current dip as a compelling long-term buying opportunity, with Brown having added to his position. They emphasize Netflix's robust content pipeline, expanding ad revenue, and its position as a critical technology platform as key fundamental drivers for future growth.

Historical analysis reveals that similar breaches of the 200-day MA have often preceded significant rebounds for NFLX, with an average 17% return over six months and 25% over twelve months in past instances. This historical precedent, combined with a consensus "overweight" rating from Wall Street analysts, suggests that the current weakness may be a temporary reset rather than a fundamental breakdown.

Key Decisions for Investors

• Investors should consider the current technical weakness as a potential long-term entry point, aligning with historical rebound patterns and expert bullish sentiment.
• Monitor Netflix's fundamental drivers, particularly its content pipeline and ad revenue growth, as these are cited catalysts for future performance.
• Evaluate position sizing, acknowledging the short-term technical signal while leveraging the historical data suggesting strong average returns over 6-12 months post-dip.