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On Tuesday after the close of trading Netflix (NFLX) smashed through fourth quarter projections by adding 8.76 million subscribers globally in the quarter. That easily beat analyst estimates for the quarter of 7.9 million new subscribers. For the quarter earnings came to $1.30 a share against 30 cents a share in the fourth quarter of 2018. (A lot of that $587 million in net income for the quarter came from a $438 million tax benefit in the period.)

And then Netflix took all the fun out of the quarter by telling Wall Street to expect only 7.0 million net new subscriptions in the quarter versus 9.6 million in the first quarter of 2019. That was well below the 8.9 million in net new subscribers projected by Wall Street for the first quarter of 2020.

So the stock tumbled on Wednesday, closing down 3.58%.

Today, Thursday January 24, Netscape has rallied very strongly gaining 7.24% at the close.

Let me try to disentangle the action over the last two days.

First, the lowered guidance for the current first quarter of 2020 confirmed Wall Street’s fears for the quarter for the market in general. Wall Street is looking for a big rebound in earnings growth in 2020 to justify current extreme valuations. If that earnings growth–forecast at 9% to 10% for 2020 as a whole above 2019 earnings for the Standard & Poor’s 500–doesn’t come through, then current valuations aren’t sustainable and we’re looking at some kind of correction in 2020.

In other words, the pull back in Wednesday trading in Netflix, a day when the market as a whole gave back early gains by the close, was a reflection of general market wide fears.

Second, today, investors have received “good” news for Netflix, specifically, in the form of bad news for Netflix competitors. For example, Comcast(CMCSA) reported a net loss of 133,000 video subscribers for the quarter, a big jump from the 19,000 subscribers it lost in the first quarter of 2019. That was a reminder that Netflix and other streaming providers continue to eat away at the video customers of Comcast and other cable companies. Netflix is still on the right side of the growth story even if it is facing increasing competition in the steaming space from new services from Disney (DIS) and Apple (AAPL.) The story, as Netflix CEO Reed Hastings, said in the post-earnings video Q&A session, is that Netflix’s great content is taking away viewers from cable. Netflix shares also got a big boost when Stifel analyst Scott Devitt concluded that Comcast’s losses were Netflix’s gain and opined that cable is shrinking with no end in sight. Other analysts have come out in support of Netflix and its share price since the guidance cut. Deutsche Bank moved its target to $400 from $395, for example. Bernstein went to $423 from $415. Goldman cut its target to $430 from $450 but at $450 Goldman had been looking for an almost 30% gain in the shares. At $430 Goldman is still calling for 23% gain even after today’s big surge.

In other words, the gain today came on Netflix specific news and analyst support.

Using Netflix as an indicator and not as a stock per se, what interests me is the high degree of nervousness exhibited after the company issued negative guidance. And then the huge bounce back on what was, if you come right down to it, affirmation of the pre-earnings Wall Street opinion. The huge two day volatility in Netflix doesn’t strike me as a sign of  healthy market. Instead it reads like a very late stage where investors and traders (mostly traders, I’d hazard, given the short time period we’re looking at here) are anxious to jump on anything that promises a quick gain.

I’ll be watching what happens to Netflix’s share price over the next few days to see if there’s any truth to that assessment. If there is, I should see Netflix drift back downward as traders take some profits.