Netflix, Inc. (NASDAQ: NFLX) witnessed a significant spike in options trading on Thursday, as investors acquired a total of 828,879 put options. This figure represents a remarkable increase of 163% compared to the average daily volume of 315,490 put options. This sudden surge in trading activity coincides with notable insider sales, raising questions about the company’s performance and future outlook.
Insider Sales Raise Eyebrows
Amid the rising options volume, two key executives at Netflix made headlines with substantial stock sales. On November 3, 2023, Chief Financial Officer Spencer Adam Neumann sold 23,600 shares at an average price of $109.76, totaling approximately $2,590,241.60. Following this transaction, Neumann holds 39,310 shares valued at around $4,314,508.36, marking a significant reduction of 37.51% in his ownership stake.
The following day, on November 4, 2023, Chief Executive Officer Gregory K. Peters sold 20,270 shares for an average price of $109.57, bringing in about $2,220,943.36. After this sale, Peters retained 127,810 shares valued at approximately $14,003,886.08, which is a 13.69% decrease in his ownership. These transactions were disclosed in filings with the Securities and Exchange Commission.
In total, corporate insiders have sold 1,630,160 shares valued at $171,076,053 over the last 90 days. Currently, insiders own about 1.37% of Netflix’s stock.
Institutional Activity and Analyst Ratings
Recent trading activity also included changes from several hedge funds concerning their positions in Netflix. Brighton Jones LLC increased its holdings by 5.0% in the fourth quarter, now owning 5,390 shares valued at $4,804,000. Similarly, Revolve Wealth Partners LLC raised its position by 16.4%, acquiring an additional 144 shares, bringing their total to 1,023 shares worth $912,000.
Other firms also made notable adjustments. MBA Advisors LLC initiated a new position valued at approximately $253,000, while MassMutual Private Wealth & Trust FSB boosted its stake by 19.0% to 2,456 shares valued at $3,289,000. Hedge funds and institutional investors collectively own about 80.93% of Netflix’s stock.
Analysts have provided a mixed outlook on Netflix shares. Rosenblatt Securities reaffirmed a “neutral” rating with a target price of $105.00. Evercore ISI maintained an “outperform” rating, setting a price objective of $138.00. Others, including Morgan Stanley and KeyCorp, have provided target prices of $120.00 and $110.00, respectively. Overall, Netflix holds an average rating of “Moderate Buy” with a consensus price target of $127.13 according to MarketBeat.com.
Netflix’s stock value opened at $88.00 on Friday, reflecting a slight decline of 0.1%. The company has a market capitalization of $372.88 billion and a price-to-earnings (P/E) ratio of 36.76. The stock has fluctuated between a one-year low of $82.11 and a high of $134.12.
Recent Financial Performance and Future Expectations
In its latest quarterly earnings report released on October 21, 2023, Netflix reported earnings per share (EPS) of $5.87, falling short of analysts’ expectations of $6.96 by $1.09. The company achieved a net margin of 24.05% and a return on equity of 41.86%, with revenues totaling $11.51 billion, aligning with analyst projections.
Looking ahead, Netflix has set its Q4 2025 EPS guidance at 5.450. Analysts predict that the company will post an EPS of 24.58 for the current fiscal year.
Founded in 1997 by Reed Hastings and Marc Randolph, Netflix has evolved from a DVD rental service to a global leader in streaming entertainment. The company now provides a subscription-based platform that includes a diverse range of films, television series, and documentaries, available on various internet-connected devices.
As Netflix navigates its financial landscape, the recent surge in options trading and insider sales may indicate shifting sentiment among investors and insiders alike.
