Netflix is the Darling of Investors

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Everything is coming up roses for Netflix lately, not the least a skyrocketing price jump in price last week of more than 25%.

Of course, that means the company was not exactly a bargain at that moment, but investors have a second chance as the price comes down from those heights this week. The question is how long before they start rising again, because there doesn’t seem to be any question that the company has a rosy future.

Netflix was the biggest gainer of the S&P 500 Index for both 2013 and 2015. There isn’t much of a chance that will be the case for 2016, but the year is almost over and the company’s share price seems to favor odd numbered years. So, maybe 2017?

Well, let’s take a look at the company as a whole. The jump last week was due to Q3 results that just blew by analyst estimates, but the strength of the rise was surprising due to the circumstances surrounding the estimates. What happened was, Netflix missed the Q2 estimates, though not by a whole lot. Still, it was enough for analysts to drop their estimates for the third quarter.

Chances are, Netflix would have still exceeded third quarter estimates, just not by nearly as much as it did the new lower estimates. That is why most analysts do not see that 25% percent spike as sustainable. And, indeed, the prices are already coming down.

Still, given the steady upward trajectory since 2013, the stupendously successful third quarter and the hits being churned out with original programming, analysts generally have a favorable outlook on the company as a whole. So the hardest decision is really just about when is the best time to buy. It certainly wasn’t last week at the peak, but what about now?