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Shares of Netflix (NFLX -2.85%) rose sharply on Monday. The media streaming leader’s stock closed the day 6.6% higher, driven by two very different factors.
The stock market as a whole was up on Monday. First, many investors wanted to take advantage of low stock prices after a brutal sell-off on Friday. This bullish effect was amplified by news from Great Britain, as the British government canceled most of the tax cuts it had introduced in a recent mini-budget.
Together, these activities drove the S&P 500 2.7% higher, while the more volatile Nasdaq Composite index gained 3.4%. As a Nasdaq-listed growth stock, Netflix shares benefited strongly from these positive market moves.
And Netflix is scheduled to report third-quarter results after the closing bell tomorrow. The second quarter provided a bullish response to the sell-offs that follow the reports in January and April, and Netflix investors are hanging on the edge of their seats to see how the business developed in the July to-September period.
Most of all, Netflix investors hope that the subscriber losses of the first half will remain in the rearview mirror from now on. Furthermore, everyone wants to know more about the ad-supported subscription tier that will launch on Nov. 3 — and how this new option might affect Netflix’s business trends.
We are about to get the answers to these questions tomorrow. In the meantime, Netflix’s stock may have recovered nicely in recent months, but the price still stands 60% lower year to date. In other words, Netflix has a lot to prove this week.
Anders Bylund has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
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