Netflix Faces Critical Earnings Test: Jay Woods Warns of Sub-$70 Plunge, Highlights Broader Market Risks

Wall Street is buzzing with anticipation as Netflix (NFLX) gears up to release its second-quarter financial results post-market on Thursday, kicking off the earnings season. According to NYSE insider Jay Woods, this highly anticipated event could see the "beaten down" streaming giant's stock plummet to its lowest price in nearly two years.

Woods, speaking to CNBC, cautioned that Netflix shares risk sliding below the critical $70 support level. The stock last traded below this threshold in September 2024. Investors are advised to watch for a technical "fold" in Netflix's chart, a pattern suggesting a potential reversal or repetition of past price action. "If not, we have a major breakdown," he warned.

Netflix shares have already suffered a substantial 40% decline over the past year. This downturn follows underwhelming forward guidance issued earlier in the year, ongoing uncertainties surrounding its previous bid to acquire Warner Bros. Discovery, and the high-profile departure of co-founder and former board chairman Reed Hastings.

Should Netflix's upcoming financial results disappoint Street expectations, Woods believes the stock could sink even deeper into negative territory before any potential recovery. Historical data shows a clear trend: Netflix shares have sold off following each of its last four earnings reports.

"If it breaks $70 [a share], watch $57 on a long-term basis," Woods advised, outlining a bearish scenario. Conversely, he noted, "A relief rally takes us into the early $80s. Then, we see if this is… a relief rally or something more."

Beyond Netflix, Woods is closely monitoring several other significant market drivers this week. These include key earnings reports from pharmaceutical giant Johnson & Johnson and regional bank Fifth Third Bancorp. Federal Reserve Chairman Kevin Warsh is also scheduled to testify before Congress, an event expected to draw considerable attention.

Furthermore, the Bureau of Labor Statistics will release two crucial economic indicators: the consumer price index (CPI) on Tuesday and the producer price index (PPI) on Wednesday. "That will really dictate where the Fed goes from here," Woods emphasized, underscoring the importance of these inflation data points for future monetary policy decisions. This weekly analysis is exclusively available for CNBC PRO subscribers.