Last Thursday was a really bad day for Netflix (NFLX) when the stock fell more than 10% after reporting weaker than expected subscriber growth in Q2. The stock hasn’t really been able to re-gain its footing since then either as it also traded lower on both Friday and Monday. While it’s no surprise that NFLX has been weak since its earnings report, the stock was also weak heading into the report with a losing streak of five trading days. In total, NFLX has traded lower on each of the last eight trading days. Over this time period, the stock has seen an intraday peak to trough decline of over 20%, which is significant even for a volatile stock like NFLX.
As far as eight-day losing streaks are concerned, they don’t come often for NFLX. Since the company’s IPO in 2002, there have only been five other losing streaks of eight or more days, and the most recent was more than five years ago in March 2014, and that was also the longest losing streak in the stock’s history at 11 days. Besides that period, there has only been one other streak that lasted more than eight trading days, so if Netflix finishes in the red today and tomorrow, it will truly be one of the stranger things that have happened in the stock’s history.
In the table below, we have listed each of the prior eight-day losing streaks for NFLX in its history. For each period, we have listed the eighth day of the losing streak and then how the stock performed over the following one week, one month, and three months. The only time that NFLX saw a negative one week return was following the streak that lasted eleven trading days, and the overall average one week return was a gain of 11.9% (median: 8.2%). One month later, the stock saw an average gain of 16.4% (median: 26.9%) with gains three out of five times. Finally, three months after the eighth day of the losing streak, NFLX was higher all five times for an average gigantic gain of 63.2% (median: 46.6%). One note of caution here, however, is that with a market cap of $135 billion, Netflix is not the same company or stock it was fifteen, ten, or even five years ago. While it is still volatile now, it is nowhere near as volatile as it once was, so don’t expect anything in the vicinity of a 63% (or even a 46%) move in NFLX over the next three months. NFLX shareholders would willingly take a quarter of that at this point. Earnings season is about to get really busy, so stay on top of the latest trends and moves by starting a two-week free trial to Bespoke Institutional to access our interactive Earnings Explorer and receive ALL of our premium equity research.