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Why Netflix Stock Moved Higher Tuesday

By Daniel Sparks – Updated Dec 18, 2018 at 3:26PM

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Volatility continued for Netflix shares on Tuesday. Here's what investors should know.

What happened

Shares of streaming TV giant Netflix (NFLX 2.08%) jumped on Tuesday, rising as much as 4.9%. But the stock finished the trading day up 3.1%.

The stock's move higher on Tuesday is likely due to a combination of a rise in the prices of many tech stocks during the trading day and simply a rebound after Netflix stock's sharp decline Monday.

A couple watching TV.

Image source: Netflix.

So what

Amid a broader-market sell-off on Monday, shares of Netflix fell nearly 5%. This brought the stock's decline between Oct. 1 and Dec. 17 to more than 30%. Some investors, therefore, may have viewed the stock's pullback on Monday as a buying opportunity, essentially leading to a rebound in the stock price on Tuesday.

Notably, one analyst published a note to investors on Monday highlighting why he believed it was time to pull the trigger on Netflix stock. "We think the stock has been victim of a risk-off environment since Q4 began," MKM Partners analyst Rob Sanderson wrote on Monday (via Barron's). "We think that fundamentals and earnings potential remain as strong as ever and that macro-related weakness is creating an excellent buying opportunity."

It's also worth noting that tech stocks, in general, had a good day. This is evidenced by the tech-heavy Nasdaq Composite's 0.7% gain on Tuesday.

Now what

Investors will likely get an update from Netflix in the second half of January, when the company typically reports its fourth-quarter results.

Management expects strong growth to persist in Q4. The company guided for revenue to rise about 28% year over year during the period. 

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.

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