Netflix Stock Forecast: Negativity May Be Airing, But Don’t Change The Channel – An Algorithmic Perspective

Netflix Stock Forecast: Algorithmic Perspective

While algorithmic analysis is not to be considered conclusive, it is useful when combined with traditional techniques. Where such stocks as Netflix are concerned, algorithmic analysis – which relies upon historical trends and other information – can be especially useful in carefully piecing apart one’s investment decisions, which may otherwise be subjective to surrounding bias.

I Know First is just one investment firm that uses an advanced self-learning algorithm based on artificial intelligence, machine learning, and artificial neural networks to supplement its fundamental analyses. In doing so, it predicts the flow of money in almost 2,000 markets across a range of time frames (e.g., 3-days, 1-month, 1-year). It should be noted that the algorithm’s predictability (i.e., its accuracy) becomes stronger in 1-month, 3-month, and 1-year forecasts; as such, it can – when coupled with traditional analysis and careful reasoning – most effectively be used to analyze both short-term and long-term trends, but is not as convenient where intraday trading is concerned. The algorithm has seen a high degree of accuracy. As such, while it may seem tempting to disregard its predictions, cross-checking with its suggestions can be helpful in deciding where to place your money.

In particular, I Know First has previously helped investors decide how to engage with Netflix. Recently, in fact, the algorithm successfully predicted the success that Netflix would experience over the course of 2014, as well as the drop it would see in October 2014: this forecast was, in highlighting both negative and positive attributes of future stock performance, accurate across the 1-month, 3-month, and 1-year time frames.

Firstly, a 1-year forecast, last updated October 4th, 2013, forecasted highly bullish activity for Netflix in the 1-year time frame (Figure 8). Netflix was expected to be one of the ten best stocks of the below forecast; from October 4th, 2013 through October 4th, 2014, it held true to this prediction for a return of +42.84%.

Figure 8. One-year forecast lasted updated on October 4th, 2013. Netflix is shown to be strongly bullish, and is boxed in deep purple for emphasis. Prediction is on the left, stock performance is on the right – note that NFLX performance coincided with forecasted behavior.

Secondly, a 3-month forecast, last updated on July 18th, forecasted strongly bearish activity for Netflix in the 3-month time frame, with a signal of -16.63 and a predictability of 0.17 (Figure 9). This prediction also showed itself to be accurate: Netflix plummeted the anticipated 19.59%.

Figure 9. 3-month forecast last updated on July 18th, 2014. Netflix was one of the ten bottom-most stocks, classified as strongly bearish. As predicted, it suffered an immense drop around October 17th, 2014.

Finally, a 1-month forecast, last updated on September 11th, 2014, predicted that Netflix would be slightly bearish, once again placing it within the bottom ten stocks (Figure 10). This prediction again turned out accurate, with Netflix plummeting shortly after the 11th of October, 2014.

Figure 10. 1-month forecast last updated on September 11th, 2014. Netflix was one of the ten bottom-most stocks, classified as slightly bearish. As predicted, it suffered an immense drop after October 11th, 2014.

The new forecast generated by the I Know First algorithm, updated on October 22nd, is shown below (Figure 11). Bright green signifies a highly bullish signal, light green also indicates that the forecast is bullish, but not as strongly so. Bright red, in turn, signifies a bearish forecast. Correspondingly, light red indicates a bearish forecast as well, but not as negative a forecast. Each compartment contains two numbers: the strength of the signal itself (represented by the number in the middle of each box, to the right), and its predictability (found in the bottom left corner, this is the approximate level of confidence the algorithm has in the forecast).

Figure 11. Updated forecast for Netflix, Inc. . Netflix’s ticker symbol – “NFLX” – is boxed in blue on the top left; its position indicates that it is strongly bullish.

As is evident above, Netflix’s position on the algorithmic chart indicates a strongly bullish prediction for the stock. This seems reflective of the company’s recent business developments, as well as holistic analyst sentiment.

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