📈 Netflix's Stock Soars

Google re-shuffles to focus on AI, Intel seeking billions for Altera, Phillips 66 shuts down refinery, PPG turns to layoffs to cut costs, Netflix delivers earnings beat

Author

Evelio Silvera
October 18, 2024

Good morning.

⚡ The Fast Five → Google re-shuffles to focus on AI, Intel seeking billions for Altera, Phillips 66 shuts down refinery, PPG turns to layoffs to cut costs, Netflix delivers earnings beat

A message before your Daily Bull Street Briefing…

We appreciate the great feedback we get from our subscribers. One of the common requests is to have a quick overview of the markets performance from the previous session. So today we launch our improved “Trends” section. We hope its a good value add for you that provides market intelligence from the Bull Street perspective.

And now…

⏱️ Your 5-minute briefing for Friday, October 18, 2024:

MARKET BRIEF
Before the Open

As of market close 10/17/2024.

Pre-Market

  • Blackstone shares increased 6.3%, among the top gainers on the S&P 500.

  • CSX shares dropped 6.7%, the worst Nasdaq performer and among the worst on the S&P 500.

Fear & Greed

*UP 0 pts

Trends

Dow's Record Run

Markets in Review: The Dow Jones Industrial Average just notched its fourth record close in five sessions, while the S&P 500 barely budged, and Nasdaq saw a tiny uptick.

The Big Picture:

  • Retail sales are robust, suggesting the U.S. consumer is still spending, which is good news for the economy and stocks alike.

  • TSMC's upbeat forecast has lit a fire under chip stocks, reflecting strong demand in AI tech, a sector ripe for growth investors.

  • This market behavior signals confidence, particularly in technology and retail sectors, presenting an attractive entry point for investors eyeing long-term gains.

Key Points:

  • Economic Indicators: Monthly retail data beat expectations, hinting at underlying economic strength despite rate cut speculations.

  • Tech Sector Surge: TSMC's (TSM) positive outlook isn't just good for chipmakers; it's a beacon for tech investments overall, including potential spillovers into crypto mining tech.

  • Corporate Earnings: Strong showings from companies like Travelers (TRV) and Blackstone (BX) underscore a broader corporate health, supporting a bullish market stance.

What They're Saying: "The market's resilience in the face of rate uncertainties shows a mature investor base that's looking towards long-term growth, particularly in tech," notes a market strategist.

WHAT WE’RE WATCHING
Events

  • Thurs. Oct. 24: Dept. of Labor - Unemployment Claims, 8:30AM

  • Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.

Earnings Reports

  • Today: America Express, Proctor & Gamble, Fifth Third Bancorp, Ally Financial, Regions Financial

  • Monday: SAP, Nucor, Logitech

MARKET BRIEF
Leading News

Netflix Surges After Earnings Beat—Is the Streaming King Back?

Why it matters:
Netflix (NFLX) is proving it’s still a heavyweight in streaming. After a rocky year, the stock's 5% jump in pre-market trading suggests renewed confidence.

The big picture:
Netflix’s third-quarter earnings crushed expectations, delivering $3.73 per share vs. the $3.49 forecasted by analysts. Revenue hit $8.54 billion, and the company continues to add subscribers, even as competition heats up.

The password crackdown strategy paid off, driving subscriber growth, while investments in original content kept viewers hooked. The ad-supported tier is also starting to contribute meaningfully to the bottom line, opening up new revenue streams.

With new subscribers flooding in from EMEA and APAC, Netflix proves its global appeal isn't just surviving; it's thriving.

Key Points:

  • Subscriber Growth: Nearly all new customers came from outside the Americas, showcasing Netflix's successful international strategy. Subscribers: 247.15 million globally, up from 238.39 million last quarter.

  • Revenue Forecast: Projecting an 11% to 13% sales increase next year, Netflix is betting big on continued growth through new content and pricing power.

Go deeper:

  • Netflix’s strategy to fight churn—by enforcing account sharing limits—has turned into an unexpected growth lever.

  • With original hits like One Piece and an expanding global library, Netflix remains top-of-mind for viewers worldwide.

  • Ad-tier success could push earnings higher, capitalizing on advertisers targeting Netflix's massive, diverse user base.

What they’re saying: “Netflix’s pivot to cracking down on password sharing was the right move at the right time, boosting both subscribers and revenues,” said Michael Nathanson, Senior Analyst at MoffettNathanson.

The bottom line: With a successful quarter and promising ad revenue growth, Netflix looks positioned to outperform in the coming months. Investors should keep an eye on its ad-tier and continued global expansion—both critical for long-term gains.

Headlines

  • Intel seeks billions for minority stake in Altera business (link)

  • Google gets new head of search and ad business as part of AI-focused reshuffling (link)

  • How does WhatsApp make money? (link)

  • Phillips 66 Announces Shutdown of L.A. Refinery, Impacting 900 Workers (link)

  • PPG will lay off 1,800 employees as paints and coatings maker aims to cut costs (link)

  • Sam Altman’s Worldcoin startup is dropping the coin and doubling down on Orbs (link)

  • NHTSA opens probe into 2.4 mln Tesla vehicles over Full Self-Driving collisions (link)

CRYPTO
Fear & Greed

*UP 2 pts

Headlines

  • Is Satoshi’s Bitcoin stash safe? ETF inflows might soon rival his holdings! (link)

  • Crypto Exchange Kraken Launches Wrapped Bitcoin Token kBTC (link)

  • BlackRock's spot bitcoin ETF draws in over $1 billion so far this week (link)

DAILY SHARE
On the Socials

*Hat-tip to netcapgirl