Netflix's underwhelming subscriber gains spark 'vigorous debate' about the future
Topic of the day
Netflix (-7,5%) shares are skidding Wednesday after the company posted disappointing subscriber growth for the March quarter -- just 4 million net new subscribers, short of the company's projection of 6 million. Netflix shares have declined 12.2% over the past three months though they're up 17.3% over a 12-month span. The S&P 500 has risen 7.3% over three months and 51.6% over 12 months. Investors were eagerly awaiting Netflix's figures on its business performance in the first three months of 2021. In the first fiscal quarter, the streaming company earned 3.75 US dollars per share, after an EPS of 1.57 US dollars had been on the books in the same period of the previous year. This was more than analysts had anticipated; experts had previously expected earnings per share to be $2.97. Sales were also up year-on-year: Revenues climbed from $5.77 billion to $7.16 billion, after experts had previously seen revenues at $7.14 billion. After the boom at the beginning of the Corona crisis, which had brought Netflix record results last year, the rush of customers slowed down sharply. Due to pandemic-related production problems, there has recently been a lack of new streaming hits. In addition, Netflix is struggling with growing competition. Disney+, the Mickey Mouse company's streaming service launched in November 2019 as a Netflix chaser, had already cracked the 100 million paid subscriptions mark in March. Netflix still has more than twice as many users, but Disney is catching up rapidly and is still represented in far fewer countries.
For more analysis and market information, subscribe to the Themes Trading newsletter. The Themes Trading "UK Real Estate" is now online: https://www.swissquote.ch/investment-themes-webapp/IThemeDetail.action?…
The Swiss stock market recovered some of its recent losses in midweek. The SMI gained 1.2 percent to 11,209 points. Among the 20 SMI stocks, there were 14 price gainers and six price losers. 48.43 (previously: 48.21) million shares were traded. Defensive stocks were in demand, as were cyclical stocks. Meanwhile, financial stocks weakened. They were slowed by the again lower bond yields. Credit Suisse (-0.5%) was also weighed down by fears that the Archegos debacle could weaken the bank's earnings situation more than previously known. UBS fell 1.2 percent. Roche, a heavyweight, made a significant contribution to the SMI's recovery. It rose nearly 3 percent after the pharmaceutical company reaffirmed its full-year targets when it released first-quarter sales figures. Also in the pharma sector, Novartis gained 1.1 percent. Alcon (+2.4%) and Lonza (+1.3%) were also sought after. Index heavyweight Nestle improved 0.9 percent. The food company will present figures on Thursday. Givaudan shares, also considered defensive, advanced 0.7 percent. Among cyclicals, Sika (+2.1%) again benefited from the convincing sales figures that the building materials group presented on Tuesday. The share price of cement producer Lafargeholcim rose 0.9 percent following a media report that the company is considering the sale of its Brazil business. Away from the SMI, Adecco lost 2.2 percent and Temenos (-2.8%).
After the previous day's losses, the stock markets in Europe trended upward on Wednesday. The DAX rose by 0.4 percent to 15,196 points. The Euro Stoxx 50 rose 0.9 percent to 3,976 - here strong premiums in the retail, pharmaceutical and technology sectors had a stronger effect. Hugo Boss shot up 6.7 percent. The market said that Kering, LVMH or even an investment company could buy into the fashion company. In addition, it was also said that major shareholder Mike Ashley could further increase its share. Otherwise, mostly business figures moved the prices. For ASML it went up by 4.1 percent. In the first quarter, the gross margin of 53.9 percent had developed "excellent". Carrefour gained 5 percent after figures. Heineken (+4.8 percent) benefited from rising beverage sales in the first quarter and earned significantly more than in the year-earlier period. Shares from the online and delivery services sector were not sought after, here a report by the Financial Times that Uber Eats wants to enter the German market put the brakes on. In addition, concerns are growing on the stock market about how the growth rates from Corona times will continue after the end of the pandemic. Delivery Hero fell by 1.5 and Hellofresh by 3.7 percent, Deliveroo dropped by 4 and Just Eat Takeaway by 2.9 percent. Zalando's preliminary quarterly figures (+0.4%) were well above forecasts, but they did little to support the stock, which was already doing very well. Meanwhile, the shares of Juventus Turin (-13.7%) and Borussia Dortmund (+0.1%) were priced out the official failure of the envisaged, financially presumably extremely lucrative Super League. The BVB share had already anticipated this the previous day.
On Wednesday, U.S. stocks bounced higher after two consecutive days of declines. After a sluggish start to the day, the S&P 500 rose 0.9%. The tech-heavy Nasdaq Composite added 1.2%. The Dow Jones Industrial Average gained 0.9% to 34,137 points. Some analysts said the recent stretch of declines was a healthy pause for stocks. On the reporting day, among others, Verizon Communications came up with figures. The telecom group increased sales and profits, net income increased by about 25 percent to 5.38 billion dollars. The expectations of analysts were thus just exceeded. Verizon lost around 178,000 mobile customers, but gained 102,000 customers for its Fios Internet service. The stock fell 0.4 percent. Intuitive Surgical jumped nearly 10 percent. The medical technology company beat market estimates on both earnings and revenue. CSX rose 4.3 percent, although the railroad company in the past period had not reached market estimates. Here, positive analyst comments from RBC and Deutsche Bank are likely to have supported the share price. The oil industry service provider Halliburton (-3.6%) returned to the black in its first quarter and performed better than analysts had expected in terms of profit and sales. Nevertheless, sales declined more significantly.
Japanese stocks were broadly higher, led by strong gains in electronics stocks, following two consecutive sessions of selloffs. The Nikkei Stock Average was up 1.96% at 29067.55. In China, the stock exchanges are mixed: While Shanghai is one of the very few stock exchanges trading just in the red, Hong Kong is friendly. China Life Insurance rise by 3.1 percent. The life insurer has a profit jump in prospect. The South Korean Kospi presents itself slightly firmer and is pulled by technology stocks. In the run-up to the upcoming business figures of the car company Kia in the course of the day, the price rises by 0.6 percent.
U.S. Treasury yields weakened slightly in Asia, after they held ground in Wednesday's choppy session with investors showing little trouble absorbing a large auction for government paper.
Jefferies raises Sika target to CHF 325 (316) - Buy
JPM raises Delivery Hero target to EUR 166 (147) - Overw.
IR raises Zalando target to EUR 112 (108) - Buy
Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.