American online media giant Netflix (NFLX) stock seems to be on fire, leading the tech stock rally today. At around 1:33 PM ET, the company’s stock posted its high of the day so far of $297.11, which was about 9.6% up from its previous day’s closing. Interestingly, NFLX managed to settle in the green territory even on Thursday despite a sharp sell-off in other tech companies (IVV). Yesterday, Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), NVIDIA (NVDA), Facebook (FB), Intel (INTC), and Microsoft (MSFT) lost 10.0%, 2.5%, 2.8%, 6.0%, 2.9%, 5.5%, and 3.7%, respectively. However, the market’s mood seems to have reversed today.
What’s driving the optimism today?
Earlier today, Goldman Sachs expressed its positive views on Netflix and reiterated its price target of $400, CNBC reported. In a note, Goldman Sachs analyst Heath Terry said, “With Netflix shares down 36 percent since record highs in July, and the S&P 500 down 10 percent over the same period, we believe Netflix represents one of the best risk/reward propositions in the Internet sector.” The analyst also praised the online media provider’s “investment in content, technology, and distribution,” which he thinks should “drive subscriber growth well above consensus expectations” globally.
Goldman’s target of $400 reflected a 47.5% upside potential in Netflix stock from its Thursday closing price of $271.20. The research firm’s confidence in Netflix’s future growth potential could be the main reason its stock surged 9.6% today. Plus, the broader market recovery, triggered by solid December jobs data and the Fed chairman’s positive comments, added fuel to the stock rally. At 2:00, the S&P 500 was up 3.2% while the NASDAQ Composite Index (QQQ) was trading with solid 4.2% gains.
According to Wall Street analysts’ consensus data compiled by Reuters, about 65% of the analysts covering Netflix recommended a “buy” on the stock as of January 3. These analysts’ consensus target price of $385.34 reflected an upside potential of 42.1% from its market price on January 3.