It’s a Screaming Streaming Stock Market Rally

Screaming stock market continues upward…

I am of course referring to NFLX which rallied +18% on Thursday after posting a 5% increase in subscriber growth and beating earnings consensus by 50% with Q2 EPS of  +$0.06 vs. +$0.04. 

NFLX is now +93% since the beginning of Q2 and is +137% YTD.   

Other stocks of a similar genre showed less spectacular but still impressive gains, with AMZN +3%, GOOG +3.5%, and EBAY +3.4%.

The price action in NFLX, and other names with exposure to  video streaming was the driving force in NASDAQ +1.25% at 5163 closing at a fresh all time high, the only major market average to do so.  Clearly, NFLX screaming stock market rallyand GOOG have been leading the charge as the NASDAQ was rallied 5.5% in the last 5 trading days.

Is this a sustainable move that can built on for a “New leg higher”??   Of course only time will tell but both NFLX and GOOG are textbook affirmations of the most basic Rule #1 of investing…..”Buy what you Like”.

GOOG reported after the close with a beat on both revenue and EPS for Q2 as the stock rallied +10% in afterhours trading.  In the last 6 trading days, GOOG has gone from a 5½ month low to a 10 month highs, with a 12% gain in just 6 days.

That doesn’t include the post earnings rally after hours that took the stock above $640 to multiyear highs, a 24% move from July 8.  An astounding rebuke to the law of large numbers!!

We’ve been conditioned to treat sharp price moves in after hours trading with plenty of caution, and  the staying power of GOOG to hold multi year highs of $625 level will get plenty of attention. It was just Wednesday that 8% gains post earnings from INTC evaporated by Thursday morning.

To be fair, INTC close with a +0.7% gain  and is trying stem the tide in the much maligned chip space.  At $29.90, INTC is still 6% below its 200 day MA.

While usually not in favor of outsized gains that can inspire manic market behavior, were not throwing a flag yet on NFLX and GOOG.  GOOG has never been an “expensive” stock and there’s nothing to “Not to Like” about an industry leader breaking out of a multiyear trading range.

marquee-netflixNFLX is trailblazing into the unknown and anyone who thinks they can “model” their revenue 3 to 5 years out, not to mention put a multiple on it, is just nuts.  Consider where AMZN was 5 to 10 years ago.

Certainly some “backing and filling” or profit taking  from time to time would be healthy for either stock, but Don’t Even go there with the China Syndrome analogy.  

Both have seasoned management teams that have “survived and thrived” through periods of adversity.   

GOOG signed up for self prescribed “adult supervision” when it brought on Eric Schmidt early in their ascendency, and NFLX had a “near death experience” with a bungled 2 tiered pricing plan that saw the stock lose 75% of its market value in less than 6 months.

There are likely companies on the margin that are only living off stretched valuations in the space, but the two market leaders are no House of Cards.

tanderson@mndpartners.com tjanderson56@gmail.com

Twitter: @TJAnderson1

DISCLAIMER::

NOTICE REGARDING PRIVACY AND CONFIDENTIALITY This e-mail and any attachments thereto is intended only for use by the addressee(s) named herein and may contain legally privileged and/or confidential information. If you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, is strictly prohibited. If you have received this e-mail in error, please immediately notify me and permanently delete the original and any copy of any e-mail and any printout thereof. E-mail transmission cannot be guaranteed to be secure or error-free. The sender therefore does not accept liability for any errors or omissions in the contents of this message which arise as a result of e-mail transmission. In accordance with SEC Rule 17a-4 and NASD Rule 3010; Emails sent to and from this address may be recorded and are subject to archival, monitoring, review and retrieval by the TJM Compliance Department. TJM and/or its affiliates are a member of FINRA, CBOE, NFA, SEC, and SIPC. TJM’s main office is located at 318 W. Adams 9th Floor, Chicago, IL 60606. For more information about TJM, please contact (312)-432-5100 or fax (312)-432-449

About the Author

Leave a Reply 0 comments

Leave a Reply: