Netflix saw heavy selling in April after the earnings release was a big disappointment with investors concerned over a drop in subscribers for the first time in a decade. Furthermore, they forecast a large drop of 2 million subscribers for Q2. One of the strategies that the company is going to employ, alongside cost-cutting, is a ‘with advertisements’ tier that will be a cheaper monthly subscription.

Will Netflix’s plan to regenerate growth work?

The seasonal pattern for Netflix is very strong during the summer months. Over the last 15 years, Netflix has gained 13 times and only lost value twice in 2007 and 2008. The largest gain was a huge 41.08% in 2015. The largest fall was -9.40% in 2007. The average return has been an impressive 13.58%.
Are the recent drops in Netflix great opportunities to buy the dip? Or has ‘paid for tv’ just become far too competitive now for another repeat of summer gains?

Major Trade Risks: If growth metrics show further signs of weakening optional purchase products (like a Netflix subscription) and luxury goods tend to see a period of weakness.

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