Netflix (NASDAQ: NFLX) shares have entered dangerous technical territory, flashing multiple bearish signals that suggest momentum could unravel further.
The stock closed at $1,094, slipping below all its major moving averages, the 20-day, 50-day, 100-day, and 200-day, in a sharp move that often precedes extended downside pressure.
Notably, the stock has had a rough couple of sessions, dropping almost 10% in the past week. Still, it remains up 23% year-to-date.
This marks the first time since the streaming giant’s long-term uptrend began that Netflix has decisively fallen below its 200-day simple moving average (SMA) of $ 1,114.33. The last such breach saw shares trading under $350.
Additionally, momentum indicators are flashing warnings. The RSI sits just above oversold levels, signaling accelerating bearish momentum despite signs of short-term exhaustion.
While similar readings have previously led to brief stabilization, the current setup appears far weaker.
Rising selling volume near support suggests institutions may be trimming exposure after months of consolidation. With Netflix now trading below all major trendlines, bulls must quickly reclaim the 200-day moving average or risk a deeper correction.
Why Netflix is falling
The latest bearish sentiment toward Netflix comes despite upbeat revenue and earnings guidance, as investors focused on a weaker-than-expected operating margin and renewed valuation concerns.
In the most recent quarter, the streaming entity posted a 28% operating margin, below its 31.5% forecast, due to an unexpected tax expense in Brazil. Although Netflix said the issue won’t affect future results, it trimmed its 2025 margin outlook to 29% from 30%.
At the same time, the stock has faced uncertainty amid rising competition from AI-driven content platforms and renewed backlash after Elon Musk urged users to cancel subscriptions over “woke” content.
Despite strong ad sales and hit titles, investors remain cautious about Netflix’s profitability and valuation heading into 2025.
Featured image via Shutterstock
