Summary

Netflix stock fell over 20% immediately after its earnings report on October 15th, 2014, because of consumer growth not reaching expectations.

Investors have expressed concerns over international expansion and content costs, but these are necessary for the company’s future.

Expansion in European markets and new, attractive original content means Netflix stock is poised to make a strong recovery by the end of the year.

The I Know First algorithm is bullish for Netflix in the three-month and one-year time horizon.

Algorithmic Analysis

Netflix’s position on the algorithmic charts indicates a strongly bullish signal for the company in the three-month and one-year time horizons; in the short term, of course, this signal may not be as accurate, but this appears to coincide well with the long-term outlook for the company.

The precipitous drop of Netflix’s stock price has striking similarities to the one it experienced in 2011. Just like it did then, the stock will recover and can earn investors a healthy profit. This time, it will not take the stock as long to recover, because the price increase is not as drastic and Netflix has solidified itself as the number one streaming website for television shows, movies, and original content. High costs of international expansion and original content are necessary, and will help the company continue to grow its consumer base and revenues, making the company financially healthy.

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