Markets Defused gives an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Netflix beat expectations, but outlook was shy
- Frasers share rose as Sports Direct leads profit growth
- Royal Mail nudged up, but bigger narratives are afoot
- Ray-Ban boosted as Meta is eyeing $5bn investment
- Warner Bros Discovery rallied on break-away rumour
- Nokia stock dropped on dim financials
- Samsung landed a deal for British AI startup
- Meta’s Llama AI won’t make it to EU
Netflix beat expectations, but outlook was shy
Netflix Inc (NASDAQ:NFLX, ETR:NFC) stock was on the back foot in Thursday night’s ‘afterhours’ dealing, despite revealing expectation-beating financials for its second-quarter.
Revenue, earnings and subscriber numbers all surpassed Wall Street expectations – revenue was $9.56 vs $9.53, EPS $4.88 vs $4.74, and subscribers were up 8.05mln vs 4.7mln.
But, the streamer’s revenue guidance for the third quarter disappointed compared to prior market consensus – with the company expecting $9.73 billion versus the $9.83 billion pencilled in by analysts.
In New York, Netflix stock initially fell around 6% before recovering – as the share price turned positive about an hour after the results were published.
Frasers share rose as Sports Direct leads profit growth
Shares in Frasers Group PLC (LSE:FRAS) advanced nearly 10% on Thursday after its Sports Direct business helped drive improved profits for the retailer’s full year.
Whilst Mike Ashley’s retail conglomerate saw a 0.9% decline in revenue, to £5.54 billion, amidst a slowdown in the luxury end of its market, adjusted profit for the year increased to £544.8 million from £481.8 million.
Looking into the new financial year, Frasers sees its profits improving substantially with a new guidance range of £575 million to £625 million for the 2025 financial year.
Frasers, in its investor communications, highlighted that it is continuing to expand its “retail ecosystem and establish new brand partnerships”.
Meanwhile, chief executive Michael Murray talked up the group’s infrastructure.
Royal Mail owner nudged up, but bigger narratives are afoot
Royal Mail owner International Distributions Services PLC (LSE:IDS) shares nudged higher, closing Thursday’s session up 1.8% priced at 342p, after a trading update delivered a strong showing.
First quarter revenue was up just over 8%, totaling £3.3 billion, with the postal company pointing to higher stamp prices, strong demand for parcels and election post.
It comes as the company is on the receiving end of takeover interest from Czech billionaire Daniel Křetínský, who has offered £3.6 billion to buy the company.
The Royal Mail business contributed £2 billion to group revenue, up 10.6%, whilst the GLS parcels business generated £1.3 billion, up 4.8%.
British first-class stamp prices increased in April, by 10p to £1.35, whilst second-class stamps increased to 85p from 75p.
Ray-Ban boosted by report that Meta is eyeing $5bn investment
Facebook and Instagram owner Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) is eyeing an investment in Ray-Ban parent company EssilorLuxottica, the company behind Ray-Ban glasses.
It follows the successful collaboration between Meta and Ray-Ban which created ‘smart’ sunglasses that integrate cameras, microphones and mini-speakers.
The smart glasses reportedly surpassed expectations for Meta’s hardware business, which also includes the Quest VR headsets.
According to media reports, Meta is negotiating to purchase around a 5% stake in the eyewear group which could be worth some $5 billion.
In Europe, EssilorLuxottica shares surged close to 7% on the news on Thursday.
Warner Bros Discovery rallied on break-off rumour
Warner Bros Discovery Inc (NASDAQ:WBD, ETR:J5A) shares traded on the front foot on Thursday amid reports that it is considering a break-up, to separate its streaming and content business from its legacy TV networks.
Such a move could separate the premier new company comprising the Warner Bros movie studio and the Max streaming service from the group’s $39 billion debt pile, according to financial media commentators.
It could also pave the way for non-core business and asset divestments.
The reports, citing ‘people familiar with the matter’, said that talks with advisors had remains informal and no final decisions had yet been made.
In New York, Warner Bros stock was up 4.5% changing hands at $8.69.
Nokia stock dropped on dim financials
Scandinavian tech and telecoms firm Nokia Corporation (NYSE:NOK) saw its New York stock fall around 7% after its second-quarter financials revealed a significant decline.
Revenue was down 18% year-over-year to €4.47 billion, and was below the forecast €4.74 billion.
Nokia made a net loss of €142 million, reversing a profit of €289 million in the same period last year, whilst the comparable operating profit was 32% lower at €423 million.
A slowdown in 5G investment in India was a factor as Nokia’s mobile networks segment fell by 24%.
The company, meanwhile, said it is ‘submarine’ networks business to the French government. With the aim of capitalising on demand for AI-related applications, Nokia recently announced a deal to acquire optical networks firm Infinera for $2.3 billion.
Clutching to a forecast recovery in sales in the latter part of the year and an improved pipeline for US fiber networks, Nokia stuck with optimistic full-year guidance .
Nokia was down 7.3% to trade at $3.62 in New York.
Samsung landed a deal for British AI startup
Korean tech conglomerate Samsung struck a deal to buy Oxford Semantic Technologies (OST), a UK-based startup specializing in ‘knowledge graph’ technology which is expected to enhance AI-related applications..
Samsung intends to integrate the British firm’s technology to enhance its AI offerings and deliver more personalized user experiences across its range of devices, including smartphones, televisions, and home appliances.
Oxford Semantic Technologies, via its flagship product RDFox, is seen as a leader in ‘semantic reasoning’, which is designed to optimise data processing to enable more sophisticated AI solutions.
It comes as Samsung is understood to be working to enhance and upgrade the Bixby personal assistant technology used in its smartphones and other devices.
Meta’s Llama AI won’t make it to EU
Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) Llama generative AI system will be withheld from markets in the European Union, due to the Facebook and Instagram owner’s concern over regulatory uncertainty in the bloc.
At the same time, Meta has determined that it will cease to use social media post content by users in the EU to ‘train’ its AI systems.
Llama, which like ChatGPT is a ‘large language model’ (LLM) AI system, is designed to process text, images, and audio. But, due to compliance concerns, particularly pertaining to data privacy, it now won’t be made available in the EU.
A text-only version of Llama is, however, anticipated.
Other ‘big tech’ firms have similarly adopted a different strategy for their roll-out of AI in the EU.
Elsewhere, Meta has also paused its generative AI systems in Brazil.