Netflix Stock Breaks Below 20-Day Moving Average Amid Selloff. Should You Buy the Dip?

Core Viewpoint - Reed Hastings, cofounder and chairman of Netflix, sold over 375,000 shares, causing a decline in Netflix's stock price, but the sale is part of a prearranged trading plan and does not indicate a loss of confidence in the company [1][3][4] Group 1: Stock Performance - Netflix shares are down 22% from their June high, with the recent selloff pushing the stock below its 20-day moving average at $109.47, indicating bearish momentum [2] - The stock is trading below its major moving averages (50-day, 100-day, 200-day), reinforcing a broader bearish trend [5] Group 2: Ownership and Confidence - Despite the sale, Hastings retains control over more than 21 million shares through the Hastings-Quillin Family Trust, indicating ongoing commitment to Netflix [3] - The transaction is viewed as routine portfolio management rather than a sign of diminished confidence in the company [4] Group 3: Technical Analysis and Valuation - The 100-day relative strength index (RSI) for Netflix is nearly 48, suggesting that downward momentum is not yet exhausted [5] - Options pricing indicates that Netflix stock could potentially drop to around $91, representing a further 12% decline from current levels [6] - Netflix is currently trading at a forward price-to-earnings (P/E) ratio of approximately 43x, which is significantly higher than leading AI stocks like Nvidia [6] Group 4: Market Sentiment - Despite the risks associated with the stock's performance, Wall Street remains bullish on Netflix, anticipating that its dominance in the streaming sector will drive share price growth by 2026 [7]