Netflix Stock Plummets 9% Despite Posting Strong Q1 Earnings

Netflix stock (NASDAQ: NFLX) is facing extreme selling pressure after the release of its Q1 earnings report. The negative price action comes despite the company posting strong financial results in the year's first quarter. On Friday, the stock price plummeted 9.09% and closed the session at $555.04.

The slump in the US stock market continued for the sixth consecutive day. The S&P 500 index dipped below the 5,000 points level for the first time since February 21. This translated into a weekly drop of 3.05%, which seems to be fuelled by the dwindling rate hike expectations amid resilient inflation and strong retail sales.

Netflix Reports 16% Jump In Subscriptions

In its Q1 earnings report, Netflix revealed a 16% uptick in its memberships. This increase propelled the streaming platform's user base to 269.6 million users, beating the Wall Street estimate of 264.2. However, the company also said it won't share the subscriber numbers from next year.

Overall earnings during the quarter ending March 2024 came at $5.28, well above the forecast of $4.52. However, despite beating the top and bottom-line analyst estimates, Netflix stock took a nosedive. The second quarter revenue forecast might have something to do with it.

The company expects Q2 revenue to remain at $9.49 billion, which is marginally below the Wall Street estimates of $9.54 billion.

Netflix Stock Price Forecast & Outlook

In my previous Netflix stock price prediction, I mentioned the possibility of rejection from the supply zone above the $632.46 level. This prediction has been perfectly met as NASDAQ: NFLX failed to overcome this supply. The major reason behind this intense rejection is the presence of the weekly fair value gap, which is often hard to breach in the first attempt.

Nevertheless, there is strong support around the $550-$555 zone. Any breakdown below this support zone will push the price further down toward the $499-$537 price gap, as visible on the following chart. On the other hand, bulls need to break above $650 resistance to aim for a new all-time high.