Wall Street is fixated on Netflix as the streaming giant prepares to announce its second-quarter earnings on Thursday, an event that could see the “beaten down” stock fall below the critical $70 support level, its lowest in nearly two years. NYSE insider Jay Woods warns of a potential “major breakdown” if the stock fails to hold, eyeing $57 as a long-term target, though a relief rally could push it into the low $80s. Beyond Netflix, Woods is closely monitoring earnings from Johnson & Johnson and Fifth Third Bancorp, Federal Reserve Chairman Kevin Warsh’s Congressional testimony, and the Bureau of Labor Statistics’ upcoming CPI and PPI releases, which are expected to heavily influence the Fed’s future monetary policy.
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Wall Street analysts and investors are keenly focused on Netflix this week as the streaming powerhouse gears up to unveil its second-quarter financial results post-market on Thursday, marking the unofficial start of earnings season. According to NYSE insider Jay Woods, this pivotal event could push the already 'beaten down' stock to its lowest valuation in nearly two years.
Woods, speaking to CNBC, highlighted the critical $70 support level for Netflix shares, noting that a slip below this point, last seen in September 2024, could trigger a significant downturn. He pointed to a potential 'fold' in the firm's chart, a technical pattern suggesting a reversal of previous price movements. "If not, we have a major breakdown," Woods cautioned.
Netflix shares have experienced a tumultuous period, shedding 40% over the past year. This decline has been attributed to several factors, including underwhelming forward guidance issued earlier in the year, ongoing uncertainties surrounding its previous interest in acquiring Warner Bros. Discovery, and the notable departure of co-founder and former board chairman Reed Hastings. The company has a recent history of stock sell-offs following its last four earnings reports.
Should Netflix's Q2 performance fall short of market expectations, Woods warned that the stock could dive deeper into negative territory. He outlined potential price targets, stating, "If it breaks $70 [a share], watch $57 on a long-term basis." Conversely, a strong showing could spark a 'relief rally,' potentially lifting shares into the early $80s, after which investors would assess whether the rebound signifies a more sustained recovery.
Beyond Netflix, Jay Woods is closely monitoring several other significant market-moving events this week. His watchlist includes upcoming earnings reports from healthcare giant Johnson & Johnson and regional bank Fifth Third Bancorp. Additionally, the financial community will be paying close attention to Federal Reserve Chairman Kevin Warsh's testimony before Congress.
Crucially, Woods emphasized the importance of the Bureau of Labor Statistics' releases of the Consumer Price Index (CPI) on Tuesday and the Producer Price Index (PPI) on Wednesday. These inflation indicators are expected to be pivotal in shaping the Federal Reserve's future monetary policy decisions. "That will really dictate where the Fed goes from here," Woods concluded. This insightful weekly analysis is exclusively available to CNBC PRO subscribers.
