Netflix stock and Take-Two Interactive stock are names to trade cautiously — but not necessarily because of headline risk.
Netflix is emerging as a stock market leader, touted by investors assuming it would be immune to tariff risks. But the streaming giant was tested after President Donald Trump on May 5 said his administration would begin the process of imposing tariffs on foreign-made movies of up to 100%.
Netflix shares swooned premarket and ultimately dipped 1.9% the day of Trump's social media post. Netflix has globalized movie production and a talent for popularizing foreign-made titles like "Squid Game" and "Formula 1: Drive to Survive." After breaking out on earnings, Netflix stock is currently extended from a proper buy point.
Take-Two Interactive stock is another leading name that has dealt with negative headlines as of late. Shares dropped 6.7% last Friday after the publisher's Rockstar Games studio announced it would delay the launch of its new video game, "Grand Theft Auto VI."
The flagship title was initially set to launch this autumn. It's a sequel to a long-running video game franchise that has generated more than $8 billion in revenue for the company. Take-Two's quarterly earnings report is due on May 15. Shares are trading 6% above their 50-day line.
Netflix Stock, Take-Two Interactive In A 'Hard Penny' Environment
Mark Minervini, founder of Minervini Private Access, is cautiously optimistic about Netflix stock. "I think Netflix is doing some really great things, and they're doing things well beyond just renting movies," he said.
But the primary reason for his caution in the current market is not the stock itself, but a lack of leadership and breadth among stocks. "When you can only point to a couple of names that are working and a whole bunch that have this volatility, that's what I call a hard penny environment," he told Investor's Business Daily's "Investing with IBD" podcast.
Minervini says the market environment is currently filled with economic uncertainty and volatility driven by trade war concerns. Market volatility makes it difficult to find consistent winning stocks. He says it's an environment where traders must be cautious and conservative about even their top picks.
"I didn't get into the stock market to get an ulcer," Minervini said. "I'm going to wait for what I call an easy dollar environment, when you're picking up money off the floor."
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Trading Discipline And Selling Into Strength
Heightened volatility is leading Minervini to be more cautious about even his top picks. He says he still owns a position in Take-Two Interactive stock after buying it out of a recent base. But Minervini sold some of his position into the uptrend.
"After getting hammered on a bunch of names, I said, 'you know what, we're not going to fall for that anymore,'" said Minervini. "We're going to take some off into strength and finance the risk and make sure that if it comes back in, we've already cushioned ourselves a bit."
Minervini says while Take-Two Interactive and Netflix stock may be solid names to consider for traders' portfolios, market volatility remains a sticking point.
"The volatility is still pretty high, at this point," Minervini said. "It's enough volatility that you've got to be very quick to move and get the heck out of there if it doesn't work."
Follow Mike Juang on X at @mikejuangnews and on Threads at @namedvillage.
