Ritholtz Wealth Management CEO Josh Brown says now is the time to buy the dominant streaming platform, as Netflix remains below its 200-day moving average. Although still up 24% from a year ago, Netflix stock fell 8% this week after third-quarter profits fell short of analysts’ expectations and revenue only met expectations. The stock price fell 10% on Wednesday alone, the day after the third quarter results were announced. On Friday, the stock hit an intraday low of $1,100.15, below Netflix’s 200-day moving average, which currently sits at $1,115.43. The 200-day moving average is an important technical indicator that is widely used by technical analysts to determine the long-term trend of a stock. NFLX 1M Mountain NFLX 1M Chart With the stock currently below 200 days, Brown believes investors should take advantage of the opportunity to build new positions or increase the expansion of existing positions. Brown revealed on CNBC’s “Halftime Report” Thursday that he has purchased more Netflix stock. “I think there will be buyers here, just like in the past. Even if we go below (the 200 DMA), it will be very temporary,” he said. “I think the 200 days have worked out attractively in terms of a good opportunity to accumulate Netflix stock over time,” Brown said, calling the company one of the “five most important technology platforms in existence” and stressing that he has a bullish, long-term view on Netflix. In a recent article for CNBC, he said strong content and advertising profit growth could be the catalysts that could lift the stock from current levels. Paul Meeks, head of technology research at Freedom Capital Markets, agreed with Brown and urged the company to buy Netflix. In a recent interview, Meeks told CNBC that he would “buy with both hands” if Netflix fell below its 200-day moving average. History shows that average forward returns are generally positive after Netflix first closes above the 200-DMA for at least 100 consecutive days and then closes below the 200-day moving average. Netflix closed below the 200-DMA on Thursday. In the seven times this has happened over the past 12 years, Netflix’s forward returns were positive after 6 months five times and positive after 12 months four times. The average forward return over the last seven periods increased by approximately 17% over the subsequent six months and by 25% over the subsequent 12 months. Disclosure: All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent or affiliate companies, and may have been previously disseminated on television, radio, the Internet, or another medium. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Investments involve risk. The analysis examples included in this article are examples only. The views and opinions expressed are those of the contributors and do not necessarily reflect the official policy or position of Ritholtz Wealth Management, LLC. Josh Brown is the Chief Executive Officer of Riholtz Wealth Management and may maintain securities positions in the securities discussed. The assumptions made within the analysis do not reflect the position of ‘RITHOLTZ WEALTH MANAGEMENT, LLC’ to the end or our disclosures. Click here for the full disclaimer.
