I have written a while ago that I jumped on Netflix (NFLX) on a lowest price in the past two years with the hope that it will be a short term investment. At that time the price was hovering around $69 and my exit criteria was for it to move towards the $80 mark, while the market was put the expectations at around $90. But then the Q3 financial reports came up and it seems that the price retreated from there which for me means that I either switch my strategy or wait for long.
Netflix (NFLX) decreased about 5.3% at the moment I have drafted this article. Basically a weaker than expected profit forecast drove a sharp decline, demonstrating that earnings guidance can outweigh otherwise positive market sentiment. The Q3 financial results showed healthy indicators like:
• Revenue: $12.87 billion, up 11.8% year-over-year (in line with Wall Street expectations). • Net Income: $3.66 billion (up from $2.55 billion in Q3 2025). • Earnings Per Share (EPS): $0.87 (beats consensus estimate of $0.82). • Operating Margin: 34.6% (compared to 28.2% in Q3 2025). • Share Repurchases: Bought back 63.9 million shares for $4.8 billion in Q3, marking its largest quarter ever for stock repurchases.
While all these looked great on paper it seems that the investors sentiment took a dive which was sharply reflecting in the price. I still cannot understand how the market can react reverse to good financial results, but probably there is an underlying reason that I am not yet seeing. As an amateur investor I realize that there are many gaps in my strategies and this is one of them and something I will try to decipher in the future.
What this means for me is that the Netflix short term play of about 1-2 Months growth period, just translated as a longer play. I still see potential in it, so probably I will not liquidate my position while in the red or when retracing back to my position and will wait to see some gains from it. That will not happen overnight, but I think that taking measures like layoffs and restructuring (a reduction of roughly 1000 employees or about 6% of the workforce across product, technology, legal and HR), leadership changes (former Disney and Fox executive Peter Rice was appointed as Chief Content Officer effective October 26, 2026) and the ad supported expansion (plans to roll out its ad supported tier to 15 new countries starting in March 2027) will surely have a positive impact on the long term strategy. I just need the patience to see it through and just hold on it, which I will probably do.
PS: An update few hours before posting is that Netflix (NFLX) started already to recover from the previous day decline and it went up to $67,05 which means +3,09% regain. I am still in the red on it, but if the uptrend keeps up I might be in the green zone once again. That would get me back into a short term play, but my confidence to that happening is quite low at the moment.
