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2 months ago
Bull of the Day: Netflix (NFLX)
By: Zacks Investment Research | January 30, 2024
The headlines this year have been dominated by the “Magnificent Seven.” Seven large cap growth stocks that have been rocketing the market higher. Before the Mag 7, we had a different group of leaders pushing the market higher. It was FANG. Among those names is today’s Bull of the Day. It’s the company that appears to have won the streaming wars.
Today’s Bull of the Day is Zacks Rank #1 (Strong Buy) Netflix (NFLX). Netflix, Inc. provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. The company also provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, TV set-top boxes, and mobile devices.
The company is coming off an impressive quarter with huge subscriber growth. The company added 13 million subscribers last quarter, far outpacing expectations. This big number has led eleven analysts to increase their earnings estimates for the current year and nine to do so for next year. The bullish move has increased our Zacks Consensus Estimate for the current year from $15.86 to $16.85 while next year’s number is up from $18.92 to $20.63.
That means that current year EPS growth is now slated to come in at 40%, with next year coming in at 22.41%. Those are some solid growth numbers considering the stock is trading at 33.85x earnings. Compare that to the broad market’s 20.71x earnings. Revenue growth is forecast to come in at 14.27% this year and 11.53% next year.
Image Source: Zacks Investment Research
The Price, Consensus and EPS Surprise Chart highlights the strong move off the early 2022 lows in earnings. Estimates turned around as the stock bottomed out. Shares had dipped down to the high $100s. Since then, it has been a steady slog higher. This latest earnings report, although technically a miss on EPS, has led to a rally which broke the stock out from $500, ticking up to $575 on January 29th.
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2 months ago
Netflix Is America's Greatest Media Company
By: 24/7 Wall St. | January 24, 2024
Mega media conglomerates, struggling with legacy properties, can take a step back. After decades of dominance, their primacy is over. Netflix Inc. (NASDAQ: NFLX) has become the premier media company in the world. Its latest earnings prove that.
Netflix added 13.1 million subscribers compared to the same quarter a year ago. This was well above expectations and the largest increase since people were shut in during the worst of the COVID-19 pandemic. This was even though Netflix killed password sharing. However, it may be that people who could not share passwords moved to paid subscriptions.
Netflix also offered that advertising running in-stream would be a growing source of revenue. Amazon, Google and Facebook dominate the digital marketing industry. However, Netflix has a large enough audience that it could be a force in the sector.
One argument insists that the streaming industry has become saturated. Netflix management says otherwise: “We believe there is plenty of room for growth ahead as streaming expands, and our north star remains the same: to thrill members with our entertainment.” With revenue of $8.8 billion in the most recent quarter, Netflix posted an improvement of 12% year over year. Per-share earnings were $2.11, compared to $0.12 a year ago. (These 25 American industries are booming.)
The Also-Rans
There are several large streaming services in an industry that may not have room for all of them. This may not be because of market saturation but because consumers may not be willing to have half a dozen or more services simultaneously. Other than Netflix, the company best positioned to succeed long-term is Amazon.com Inc. (NASDAQ: AMZN). Amazon Prime is bundled with a set of services that Amazon offers, which includes free shipping and space product sales. Prime members are several times more likely to shop at Amazon than people who are not. Prime, therefore, cannot be considered a standalone product.
Warner Bros. Discovery Inc. (NASDAQ: WBD), Paramount Global (NASDAQ: PARA), Walt Disney Co. (NYSE: DIS) and Apple Inc. (NASDAQ: AAPL) are in the tier below Netflix and Amazon. Apple does not break out results for its Apple TV+, but it is a tiny fraction of the company’s total. For the media companies, streaming is core to their growth. However, each one loses money on the business.
As a proxy of how investors view legacy media companies versus Netflix, note that Netflix has a market cap of $235 million while Warner Bros. Discovery’s is $25 billion.
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2 months ago
Netflix (NFLX) Stock Soars to 2-Year Highs After Earnings
By: Schaeffer's Investment Research | January 24, 2024
• The streaming giant is boosting the tech-heavy Nasdaq
• Analysts and options traders are blasting the equity in response
After its best-ever holiday season, Netflix Inc (NASDAQ:NFLX) stock is surging today, up 13.1% to trade at $556.49 at last glance and lifting the Nasdaq-100 Index (NDX) along the way. The streaming giant is brushing off an earnings miss, instead favoring better-than-expected fourth-quarter revenue and subscriber growth -- now boasting 260.8 million paid subscribers.
NFLX's options pits are unsurprisingly exploding with activity. So far, 142,000 calls and 100,000 puts have been exchanged, or 14 times the options volume typically seen at this point. New positions are being bought to open at all but two of the top 20 most popular contracts, with the most activity taking place at the monthly January 550 and 600 calls, respectively.
Analysts are also weighing in following Netflix's results. Macquarie raised its rating on the equity to "outperform" and hiked its price target to $595 from $410. Conversely, Deutsche Bank downgraded Netflix stock to "hold" from "buy," but raised its price target to $525 from $460. Overall, no less than 16 more brokerages have hiked their price targets.
Netflix stock is now headed for its highest close since January 2022. The equity has managed to add 35% over the last three months, with its 40-day moving average recently acting as a layer of support. Year over year, NFLX is now more nearly 53% higher.
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2 months ago
Netflix Earnings Send Nasdaq Futures Surging
By: Schaeffer's Investment Research | January 24, 2024
• Earnings season remains in full swing, sending stocks higher before the bell
• Netflix posted impressive fourth-quarter subscriber growth
Following yesterday's choppy session that saw the Dow Jones Industrial Average (DJI) snap a three-day win streak, stock futures are indicating a firmly higher move before the bell. The Nasdaq-100 Index (NDX) is enjoying a particularly healthy pre-market gain, after Netflix (NFLX) posted impressive subscriber numbers for its latest quarter. Futures on the S&P 500 Index (SPX) are modestly higher as well, as investors await to digest U.S. manufacturing data and a fresh slew of big-name earnings reports.
Continue reading for more on today's market, including:
• How the SPX typically performs after record highs, per Schaeffer's Senior Quantitative Analyst Rocky White.
• Don't bet on a bounce from Bristol-Meyers stock.
• Plus, more on NFLX; ABT cools off after earnings; and eBay trims its workforce.
5 THINGS YOU NEED TO KNOW TODAY
1. The Cboe Options Exchange (CBOE) saw more than 1.1 million call contracts and 674,398 put contracts traded on Tuesday. The single-session equity put/call ratio rose to 0.57, and the 21-day moving average remained at 0.71.
2. Streaming stock Netflix Inc (NASDAQ:NFLX) is enjoying an impressive 9.9% surge before the bell, as investors celebrate the company's fourth-quarter subscriber growth of over 13 million for the fourth quarter. NFLX is slated to open at $541.00 -- its highest mark since October 2021, adding to its already impressive 52% nine-month gain. Several analysts have already chimed in with price-target cuts in response, the highest coming from Wells Fargo to $650 from $460.
3. Abbott Laboratories (NYSE:ABT) reported an adjusted fourth-quarter earnings that were in-line with analyst estimates at $1.19. Revenue was slightly above estimates, as sales crossed the threshold of $4.4 billion. Despite this, ABT is down 2.3% in pre-market trading, set to trade at $111.40, set to make a dent in its nearly 4% 2024 gain.
4. Online e-tail stock eBay Inc (NASDAQ:EBAY) is up 3.4% at $43.04 ahead of the open, after revealing plans to join the layoff barrage with a 9% cut expected in its workforce. The CEO claimed the headcount and expenses going out do not equate to the company's income and growth. Year-over-year, eBay stock is down 13.1%.
5. Plenty of blue-chip earnings reports this week.
TECH STOCKS SEND HANG SENG HIGHER
Asian markets were led by Hong Kong’s Hang Seng’s 3.6% pop that was fueled by rallying tech stocks. China’s Shanghai Composite followed behind with a 1.8% gain, after the People’s Bank of China announced plans to cut the reserve ratio requirements for banks by 50 basis points from Feb. 5. Elsewhere, Japan’s Nikkei dropped 0.8% despite business activity that expanded at its fastest pace since and exports that experienced a 9.8% year-over-year growth in December. Rounding out the region, Sout Korea’s Kospi fell 0.4%.
European stocks are higher this afternoon, after a preliminary purchasing manager's index (PMI) reading indicated progressing activity in the euro zone in January. In addition, PMI figures in the U.K. hit a seven-month high in January, helping London’s FTSE to a 0.3% lead. Elsewhere, France’s CAC 40 is up 0.9%, while tech stocks are powering Germany’s DAX to a 1.4% gain.
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2 months ago
After-hours movers: Netflix surges, Texas Instruments falls, and more
By: Investing | January 23, 2024
Netflix (NASDAQ:NFLX) shares rose 7% after it reported fourth quarter results and issued guidance for the first quarter of 2024. Netflix missed consensus EPS estimates for the fourth quarter but revenue beat, and importantly it added more paid subscribers than expected. It also issued EPS guidance for the first quarter that topped consensus. Overall results were viewed as strong.
Texas Instruments (NASDAQ:TXN) shares slumped after it reported fourth quarter results. The quarter was mixed and guidance for the first quarter was very weak, with softness expected on the top and bottom line relative to expectations.
Dismal guidance from Texas Instruments negatively impacted NXP Semiconductors (NASDAQ:NXPI), Analog Devices (NASDAQ:ADI), onsemi (ON) and Microchip Technology (NASDAQ:MCHP).
Intuitive Surgical (NASDAQ:ISRG) shares climbed 7% after it beat consensus estimates for EPS and revenue.
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2 months ago
Netflix hits fourth-quarter subscriber record, fueled by 'The Crown' and 'The Killer'
By: Investing | January 23, 2024
(Reuters) -Netflix on Tuesday blew past Wall Street subscriber estimates in the fourth quarter, driven by a strong slate of shows that included the final season of the long-running royal drama "The Crown" and David Fincher's original film, "The Killer."
The company reported it added 13.1 million subscribers in the December quarter, its largest fourth-quarter subscriber growth ever, handily exceeding projected gains of 8.97 million. That brings the total number of subscribers to 260 million.
Netflix (NASDAQ:NFLX) shares were up 8.5% in after-hours trading. The stock gained 65% during 2023.
Netflix reported per-share earnings of $2.11, falling short of consensus estimates of $2.22 per share. The company said the per-share earnings were impacted by a $239 million noncash loss related to currency exchange rates.
Revenue rose to $8.8 billion, topping forecasts and the company's own guidance of $8.7 billion in the quarter.
The streaming giant said it expects healthy double-digit revenue growth for full-year 2024, as it continues to add members and invest in its advertising business. Netflix said advertising is not yet a primary driver of revenue growth, but it aims for that to change by 2025.
"It is becoming increasingly clear that Netflix has won the 'streaming wars,'" wrote Bank of America media analyst Jessica Reif Ehrlich.
The company credited gains to the strength of its intellectual property, including "Squid Game: The Challenge," a reality show based on its most-watched TV series, new original series, such as "All the Light We Cannot See," feature films like Zack Snyder's "Rebel Moon: A Child of Fire," and non-English-language programming, including the third season of "Lupin" from France. It also cited strong demand for licensed titles.
"Looking ahead, despite last year's strikes pushing back the launch of some titles, we have a big-bold slate for 2024," the company said.
The company predicted possible further industry consolidation, particularly among companies with large and declining television networks. Netflix said it is not interested in acquiring traditional TV assets.
It said deals involving media companies are unlikely to change the competitive landscape, given the mergers that have already occurred, though it expects ongoing competition for people's time - including from gaming and social media.
Netflix said there is opportunity to grow, if it continues to improve its programming slate, simplify finding something to watch and cultivate fan bases, and establishes itself in new areas like advertising and games. While the games business is still in its early days, the company said engagement has tripled.
"The market had already largely priced in an expected double-digit climb in revenue growth, but investors are cheering an even better-than-expected result," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. "The meaningful growth in subscriber numbers is partly a result of password-sharing crackdowns, but is also testament to Netflix’s ability to keep us glued to screens."
The streaming service said it continues to invest in and experiment with live programming. Earlier on Tuesday, Netflix and TKO Group Holdings announced a more than $5 billion deal to bring World Wrestling (NYSE:TKO) Entertainment's "Raw" and some other programming exclusively on the streaming service in January 2025.
It also touted its first stage production, "Stranger Things: The First Shadow," based on its hit series.
Antenna Research found that Netflix has the lowest monthly churn rate among streaming services, with just 2% of subscribers canceling in the month of December.
Media analyst John Hodulik predicted the company would also continue to benefit from its crackdown on password-sharing, which he forecast would drive a 5% lift to revenue in the quarter.
This crackdown will likely fuel the growth of Netflix's advertising-supported tier, wrote Ehrlich. The company recently announced it had 23 million global active users on the version of the service with ads, up from 15 million in November.
Ehrlich said Netflix also is a beneficiary of changing market dynamics, which are forcing media companies to re-evaluate their strategy of retaining movies and television series exclusively for their own streaming services. She called this a "win-win" proposition, which allows Netflix to reduce its investment in higher-risk original production, even as these licensing deals provide other media companies with much-needed revenue.
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2 months ago
Netflix to stream WWE Raw in $5 billion bet on live events
By: Investing | January 23, 2024
(Reuters) -Netflix took a big step into live events on Tuesday with a more than $5 billion rights deal that would make it the exclusive home of World Wrestling (NYSE:TKO) Entertainment's Raw from January 2025.
The 10-year partnership will put Raw on the streaming platform in the United States, Canada, United Kingdom and Latin America, among other territories, the companies said.
Netflix (NASDAQ:NFLX) will also exclusively telecast outside the U.S. all WWE shows and specials, including SmackDown, as well as pay-per-view live events such as WrestleMania and Royal Rumble.
Shares of Netflix rose 2% in premarket trading, while TKO Group - the parent firm of WWE - jumped 23%.
The streaming pioneer has an option to extend the deal for another 10 years or to opt out after the initial five years.
Netflix has in recent months been keen on live events and sports, which have been a bright spot for traditional TV firms when cord-cutting is upending their business models.
It secured rights to a tennis face-off between Rafael Nadal and Carlos Alcaraz last month and had streamed a golf tournament in November featuring Formula One drivers and professionals.
The Raw deal marks Netflix's first long-term bet on live events and could help draw loyal followers that turn to WWE each week for bouts between the likes of CM Punk and Cody Rhodes.
"This deal is transformative," said Mark Shapiro, president of TKO, adding that it "dramatically expands the reach of WWE, and brings weekly live appointment viewing to Netflix".
Raw, which airs on Mondays, is the top show on the Comcast-owned USA Network, where it brings in 17.5 million unique viewers over the course of the year. It debuted in 1993 and has 1,600 episodes.
The deal with Comcast (NASDAQ:CMCSA) ends this year and Raw was paid about $265 million a year for the rights under the agreement, according to Bloomberg News.
WWE merged with UFC parent Endeavour Group to form TKO Group Holdings in a deal valued at $21 billion last year, forming one of the biggest names in wrestling and entertainment.
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3 months ago
Netflix shares rally as Morgan Stanley ups price target, cites increasing confidence in return on content spending
By: Investing | December 18, 2023
Netflix (NASDAQ:NFLX) shares jumped more than 3% Monday after Morgan Stanley raised its price target for the stock to $550 from $475 per share.
NFLX shares are trading around the $488 mark at the time of writing.
Analysts at the investment bank cited the Overweight-rated company's "attractive risk/reward," its increased confidence in Netflix's return on content spending, execution on growth initiatives, including paid sharing and advertising, and the pull-back in competitive intensity in broader Media.
Morgan Stanley also noted that Netflix has begun hedging currency, which it expects will lift earnings, although they note that the impact of FX moves will be delayed in reported results.
"We continue to see NFLX shares as offering an attractive risk/reward as we raise our estimates and PT to $550, which implies shares trade at 26x our 2025E EPS, as we continue to forecast a 25-30% EPS CAGR over the next four years," said the investment bank.
"Our earnings outlook has increased on the stronger USD since our October upgrade. There is a high 70-80% flow-through of FX moves to EBIT given the cost base of Netflix," they added.
Furthermore, Morgan Stanley said it is raising its net adds forecast for Netflix "modestly" in 2024 and beyond, as they see the combined benefits of original programming strength and competitive withdrawal benefiting member growth at Netflix.
The investment bank believes Netflix's "unmatched scale" and FCF generation opens up new opportunities for the business, noting that the streaming giant is two years into its gaming investments and "the benefits of these investments have yet to be material but offer upside in the future." At the same time, the company is also "increasingly able to optimize its content spending with new options around licensing."
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4 months ago
State Board of Administration of Florida Retirement System Has $206.64 Million Holdings in Netflix, Inc. (NFLX)
By: MarketBeat | November 25, 2023
• State Board of Administration of Florida Retirement System trimmed its stake in Netflix, Inc. (NASDAQ:NFLX) by 3.0% in the second quarter, according to its most recent Form 13F filing with the Securities & Exchange Commission. The firm owned 469,124 shares of the Internet television network's stock after selling 14,757 shares during the period. State Board of Administration of Florida Retirement System owned about 0.11% of Netflix worth $206,644,000 at the end of the most recent reporting period...
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