Netflix, Inc. Replays The Momentum Rally
The S&P 500(INDEXSP:.INX) is making all-time highs but most investors are badly lagging this year. Even the revival of the cult of Apple Inc.(NASDAQ:AAPL) stock has only brought bulls back to within about 10% of the $700 peak price of 2012.
Those intrepid few counterintuitive enough to buy back into Netflix, Inc.(NASDAQ:NFLX) in early May are the exception. Shares of the controversial streaming service have ripped more than 30% higher in the last month, more than 3-fold the gains seen in other former momentum darling like Facebook Inc(NASDAQ:FB) and 6x the return the market as a whole.
Joe Fahmy of Zor Capital says underperforming fund managers are gravitating back to mega-cap tech companies of relative maturity for the illusion of safety they offer. Companies like Priceline Group Inc(NASDAQ:PCLN), Apple and Netflix may not have the endless upside potential associated with bubble-era rallies of the past, but the risks are understood.
Netflix has a mountain of problems in terms of paying for bandwidth and high-profile fights with Verizon Communications Inc.(NYSE:VZ) but it’s relatively known and it has what investors call beta. Beta is a measure of how far a stock has moved relative to the market has a whole. With a beta of 2.2, Netflix shares have moved with more than twice the veloctity of the market.
You can see the full “Breakout” segment below: