Netflix (NFLX) Jumps 15% on Disney (DIS) Deal

Wyatt Investment Research

A deal with Disney (DIS) is pushing Netflix (NFLX) to a seven-month high.

NFLX shares jumped close to 15% today after the company inked a deal that will allow the video subscription service to run Disney movies shortly after they’re no longer in theaters. At $86.82 a share, Netflix’ stock closed at its highest level since April 24.

The multi-year Disney deal doesn’t begin until 2016, but it is clearly a coup for Netflix. Disney is the first major film studio to sell its movie rights to Netflix. As of now, most studios sell their post-theater rights to premium cable networks such as HBO, Starz and Showtime.

Starz, in fact, owns the current rights to Disney. That deal expires in 2015.

Netflix shares have now climbed 60% in a little over two months, and have ripped off a furious 45% rally since a disappointing third-quarter earnings report in late October.  

Our own Jason Cimpl saw this coming. In the October 26 edition of his increasingly popular “ChartWatch” series, Jason wrote the following:

 “A move above $70 will signal that the shares are ready to burst to a more formidable resistance level near $80. Should the rebound rally this week portend a major bottom, the shares could be on the way back to $105, or about 50% higher than their recent price.”

Sure enough, NFLX shares bounced from just under $70 – which is where they were at the time of Jason’s writing – to just under $80 a share in matter of five days. Now they’ve broken the $80 “resistance” barrier.

Perhaps, as Jason forecast, the stock will reach $105. If it does, credit Disney with the assist.



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