Netflix Stock Surges on Reach of Ad-Supported Version

Thu., May 18, 2023 | Schaeffers Investment Research

Tech stocks are rallying today, after Wall Street surged yesterday as officials seemed to make progress on U.S. debt ceiling talks. Alibaba Group Holding Ltd (NYSE:BABA), Netflix Inc (NASDAQ:NFLX), and Palantir Technologies Inc (NYSE:PLTR) are three the names making outsized moves, and below we will dig deeper into the reasons why.

BABA Missing Out on Gains

BABA is sitting this rally out, last seen down 5.9% to trade at $85.30, after the company missed fiscal fourth-quarter revenue estimates and announced it will list its cloud computing business during the next year. The security is slipping back below its 320-day moving average, after briefly conquering it in the previous session. Quarter-to-date, BABA is down 14.7%.

Options bulls are piling on, though, with 346,000 calls cross the tape so far -- triple the intraday average volume -- compared to 96,000 puts. Most popular is the May 90 call, where positions are being opened, indicating traders expect some upside by the close tomorrow.

Now Is the Time to Bet on NFLX

Netflix stock, on the other hand, is up 9.3% to trade at $371.60 at last check, after the streaming giant revealed its ad-supported tier reaches about 5 million active users per month. Shares earlier surged to their highest level since early February, guided higher by their 20-day moving average. Year-over-year, NFLX boasts an impressive 110.1% lead.

Options are affordably priced at the moment, making this a great opportunity to bet on Netflix stock's next moves. In fact, its Schaeffer's Volatility Index (SVI) of 31% sits in the low 2nd percentile of readings from the past 12 months.

Will PLTR Ride the AI Wave?

Last seen down 12.8% to trade at $11.56, Palantir Technologies stock is rising alongside its sector peers. Plus, CEO Alex Karp recently expressed optimism over the artificial intelligence (AI) market. PLTR hit a fresh one-year high of $11.62 earlier, and is now pacing for its best single-day percentage gain since February, as it adds to a 78.7% year-to-date lead.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 2.74 ranks higher than 95% of annual readings. This suggests long calls have been more popular than usual in the last 10 weeks.

Where should you invest $1,000 right now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here