Netflix (NFLX) saw a 9.7% surge on January 22, following an outstanding earnings report that revealed a top-line beat for Q4 and the company surpassing 300 million subscribers.
The stock hit a record high of $999 before cooling off to $953.99. The good news for investors betting on NFLX reaching four digits is that the stock is currently flashing a historically bullish signal.
The surge coincides with historically low implied volatility (IV), a combination that has historically led to gains.
Over the past five years, there have been eight instances when Netflix traded within 2% of its 52-week high while its Schaffer’s Volatility Index (SVI) sat in the 20th annual percentile or lower. Currently, the stock’s SVI is 25%, in the 6th percentile of its annual range.
Data shows that, after these signals, Netflix saw a 75% win rate with an average 4.7% return over the following month. From its current price of $979.92, a similar move would push the stock comfortably above $1,000.
Key technical support levels also suggest that the rally could continue. The stock has been carving a channel of higher highs since August, and breaking the upper rail of this channel could propel NFLX even further.
Additionally, the stock has support at its newly-cleared +10% year-to-date level and at its 80-day moving average, which acted as a springboard earlier this month.
Analysts have been slow to adjust their ratings, with 16 out of 41 brokerages still holding “hold” or “strong sell” ratings.
Despite this, NFLX’s 12-month price target of $1,047.20 represents a 6.6% premium from its current price, suggesting more upside potential.
