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Buy This Tech Stock Down 50% Before Earnings for Huge Upside?

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This episode of Full Court Finance at Zacks looks at the market amid Wall Street’s renewed focus on higher interest rates. The episode then dives into Netflix (NFLX - Free Report) ahead of its first quarter financial release to see if investors might want to buy the beaten-down streaming stock for big upside potential.

The market got off to a hot start Tuesday morning only to give up all of its gains and close in the red. The up and down day followed fresh data that U.S. inflation surged to another four-decade high of 8.5% in March. Buyers then stepped in on Wednesday, with the Nasdaq up 1.9% and the S&P 500 1.0% higher through mid-afternoon trading.

The positive session came as the big Wall Street banks such as JPMorgan kicked off the busy portion of first quarter earnings season. JPM’s revenue dipped 5% YoY and its first-quarter profit fell over 40%. The big decline was driven by a net credit reserve build up of $902 million, as it prepared for a potentially rocky economy amid soaring inflation and the Russian invasion.

The earnings season will show how companies are dealing with inflation and how they expect to navigate the ongoing economic turmoil in the coming months. Wall Street’s attention will likely remain on earnings as it’s already betting on a more hawkish Fed.

The big banks star this week, but Netflix, Tesla, and others will grab the headlines next week. Netflix is set to release its Q1 FY22 results on Tuesday, April 19. Netflix stock has tumbled 50% from its November records as it comes under pressure amid slowing user growth, increased competition from Disney and others, and spending concerns.

Netflix’s revenue growth is projected to slow down significantly, based on current estimates. Luckily, NFLX is exploring additional segments and new revenue streams. Plus, its valuation now matches a more mature firm, trading at decade-long-low earnings multiples. And let’s not forget that the streaming age is still in the early stages.


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