Netflix Share Price Forecast August 2021 – Time to Buy NFLX?

Shares of American over-the-top content platform and production company Netflix (NASDAQ: NFLX) are in the green today after showing a strong performance last week. It has increased by almost 6% over the past 5 days. While volatility has always been a concern for Netflix shares, they are up by almost 10% over the year, which has led to many investors asking – is it time to buy NFLX shares?

Netflix – Technical Analysis

According to the financial statement from Netflix, the company’s market cap is currently at $242.047 billion with total assets worth $40.971 billion. Income for 2020 was at $25 billion with a profit margin of 11.05% compared to $20.1 billion in 2019. NFLX shares closed on August 20^th at $546.88.

Moving averages for Netflix such as Exponential Moving Average (100)(518.03), Simple Moving Average (100)(516.40), Exponential Moving Average (200)(509.25) and Simple Moving Average (200)(518.0) are pointing towards a buy action. On the other hand oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(98.33), Neutral Williams Percent Range (14)(−9.80), Neutral Bull Bear Power(39.89) and Neutral Ultimate Oscillator (7, 14, 28)(61.59) are pointing towards a neutral action.

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Recent Developments

Netflix continues to be in the upper echelons of the streaming services industry even though it is being challenged by the likes of Disney+ and Amazon Prime.  While competitors gather momentum, Netflix subscriber base is growing as well. The company reported an increase of 207.64 million in paid customers alongside a 138% rise in earnings share ($2.97) as well as a 19% increase in sales (year on year). 55% of its revenue of $7.3 billion came from markets outside of the US and Canada.

However, NFLX shares have been quite volatile this year. They rose by 16% in mid-January only to drop by 10% in a matter of days. This happened again in mid-April, where the share price suffered a subsequent drop of 7.4% in a single day. Considering that the price is currently rising, there is a high chance that the share price will correct itself in the coming days. This has led many investors to believe that the current share price fails to provide evidence for the direction it will go in.

Should You Buy NFLX Shares?

Netflix has proved itself in the last decade where it experienced a 1420% return, with ample opportunity to grow even further. With impressive revenues flowing in from outside markets, the company is reportedly making moves into the Asian market. It is slated to produce more than 200 original titles among which are 70 live-action and Korean anime titles. While it’s true that the share price is unpredictable when it comes to sharp rises and declines, the company’s overall growth more than makes up for it.

Analysts for Netflix expect the company to maintain its rapid earnings growth over the next 5 years considering how scalable its business model is. They expect its earnings per share to compound at an average annual rate of 43% over the next 5 years,d of Amazon’s prediction of 36% growth. Investors have to understand Netflix’s uncanny earnings potential to justify its high price to earnings ratio of 56. Considering all of the above points, Netflix looks like an attractive buy for long-term investors. However,  based on previous trends,  there is a possibility that the share prices will plummet moving into September. This is one of the major reasons why investors should stay away from NFLX shares for the time being.

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