4.05pm: Netflix’s surprise subscriber loss weighs on tech stocks
US stocks finished the trading session mixed as corporate financial results for the first quarter varied.
At the close, the Dow gained 250 points to 35,161, while the S&P 500 eased 3 points at 4,459 and the tech-heavy Nasdaq slipped 167 points to 13,453.
Notable movers included shares of NetflixInc, which plunged more than 35% after the streaming service revealed that it lost 200,000 subscribers in 1Q 2022, its first quarterly subscriber loss in more than 10 years.
The Dow, though, got a boost from Procter & Gamble (NYSE:PG) Company, which saw its stock rise nearly 3% after the consumer products maker hiked its full-year revenue guidance as its latest quarterly earnings results beat expectations.
12pm: Netflix stock falls 36% on shock subscriber numbers
US stocks were mixed in noon trading as disappointing subscriber numbers from Netflix after the closing bell on Tuesday put pressure on the Nasdaq and some of its large-tech components.
At midday, the tech-heavy Nasdaq was 129 points, or 0.95% lower at 13,491, but the Dow gained 312 points to 35,223 while the S&P 500 added 12 points at 4,474.
Netflix shares fell after it reported its first decline in subscribers for over a decade and warned it could lose another 2 million users in the current quarter to end-June. It lost 200,000 subscribers in the first quarter.
“Netflix's wider problem, along with the rest of the sector is that consumers don’t have unlimited funds and that one or two subscriptions is usually enough,” commented Michael Hewson, chief market analyst at CMC Markets UK. “Once you move above that something has to give in a cost-of-living crisis, and while Netflix is still the market leader, it doesn’t have the deeper pockets of Apple, Amazon or Disney, which makes it much more vulnerable to a margin squeeze.”
Other streaming companies Disney and Warner Bros Discovery fell 4.7% and 4.5% respectively, while Amazon was down 2.5% and Meta Platforms sank 7.3%.
“While today the focus has been on Netflix, attention will shift to Tesla after the bell as the electric car maker gets set to outline its 1Q results and its expectations for 2Q and beyond,” Hewson continued. “We already know that Tesla delivered just over 310,000 vehicles, which was another record but was only just above the 308,600 it delivered in 4Q. Supply chain disruptions and their effects are likely to be key arbiters of how investors react to today’s announcement, although the extra production capacity from its new Berlin plant should allow to ramp up production capacity.”
11.01am: Proactive North America headlines:#
Great Atlantic Resources discovers new gold bearing zone at its Keymet project in New Brunswick
East Side Games Group (TSX:EAGR, OTCQB:EAGRF) mobile game Dragon Up coming to Netflix in May
Forte Minerals unveils its exploration plans for Pucarini gold project in Puno, southern Peru
Trust Stamp (NASDAQ:IDAI, EURONEXT:AIID) CEO to speak at Rutgers Law School FinTech and Blockchain Collaboratory
Belmont completes five drill holes at Come By Chance project in southern British Columbia
VR Resources gets drills turning on new magnetic anomalies at the Hecla-Kilmer copper-gold target
BioLargo sees preliminary 1Q revenue jump by 60% thanks to ONM Environmental and its engineering division
New Age Metals (TSX-V:NAM, OTCQB:NMTLF) hits palladium mineralization in all four holes at Banshee zone on its River Valley project in Ontario
Western Magnesium kicks off final engineering field inspections at its commercial pilot plant
Nextleaf completes first shipment to Ontario as it provides an update on British Columbia market
Ayurcann Holdings says it has received its flower sales license amendment from Health Canada effective April 19, 2022
Dalrada Corp strengthens its board of directors with the appointment of Nick Gordon
Todos Medical launches web invitation for Long COVID clinical study and offers further patient case study
Audacious to collaborate with the Black Institute Group on social equity initiatives in New York State
Forward Water Technologies (TSX-V:FWTC) says it is a finalist in the MABC Mining Innovation Challenge: Reduce Water Use
Fabled Copper reports up to 1.47% copper on the Ram Creek Copper Occurrence in British Columbia
PyroGenesis targets new opportunities in tightening aluminum market
Wishpond Technologies says its Winback business is performing better than expected
Idaho Champion (CSE:ITKO, OTCQB:GLDRF) Gold Mines Canada poised to advance its four cobalt projects after striking MoU with Far East-based battery group
Delta 9 Cannabis announces opening of thirty-fifth cannabis retail store; launches Canada's first mobile cannabis store
i-80 Gold says it continues to intersect high-grade gold in expansion drilling at Granite Creek
Nextech AR launches metaverse builder app ARitize Maps
Zinc8 Energy Solutions (CSE:ZAIR) says named Best-in-Class solution by New York City's leading real estate trade association
Xigem Technologie says Cylix Data subsidiary launches cloud-based SaaS business intelligence platform
9.50am: US shares head higher at open
US shares headed north midweek at the New York open despite disappointing first quarter numbers from streaming titan Netflix after-hours.
The Dow Jones Industrial Average added 281 points at 35,192. The S&P 500 gained around 20 points to stand at 4,483.
The tech heavy Nasdaq index added 19 points at 13,638.
Netflix shares are down over 30% in early New York deals as it reported its first decline in subscribers for over a decade and warned it could lose another 2 million users in the current quarter to end-June. It lost 200,000 subscribers in the first quarter.
Other streaming companies like Disney and Warner Bros also saw shares slide in early deals.
In a tweet, outspoken billionaire Elon Musk said the streaming service offerings were becoming "unwatchable".
"The woke mind virus is making Netflix unwatchable," he said.
6.30am: US stocks seen opening little changed
US stocks were expected to open flat on Wednesday amid concerns that corporate earnings are likely to be dented as consumers tighten their belts at a time when inflation is at its highest level in decades.
News in after-hours earnings on Tuesday that Netflix Inc (NASDAQ:NFLX) lost 200,000 subscribers in the first quarter of the year and that it expects to lose another 2 million in the second quarter put the focus firmly on the prospect of waning consumer spending and its possible effects on corporate America.
Futures for the Dow Jones Industrial Average rose 0.05% in Wednesday's pre-market trading, while those for the broader S&P 500 index were unchanged and contracts for the tech-heavy Nasdaq fell 0.05%.
Ipek Ozkardeskaya, senior analyst at Swissquote noted that Netflix slumped 25% in the after-hours trading after announcing that its subscriptions fell in the first quarter, dampening sentiment overall.
“The carnage in Netflix’s share price will certainly plummet the good mood in Nasdaq, which rallied more than 2% yesterday. Nasdaq futures are pointing to the downside at the time of writing,” she said.
Earnings from Tesla Inc (NASDAQ:TSLA) and Procter & Gamble (NYSE:PG) are due out today.
Indications that consumer confidence and spending may be contracting go some way to underscore the IMF’s downward revision of global economic growth for 2022 to 3.6% from 4.4% previously, adding to market uncertainty.
Additionally, concerns about the ongoing war in Ukraine and the possibility of more sanctions on Russia’s exports continue to simmer in the background and could further dampen sentiment.
“The European markets traded in the red on the back of the escalation in Ukraine, as Russia launched the ‘second phase’ of the war in Eastern Ukraine. The futures point at a positive start, yet the risks remain tilted to the downside,” said Ozkardeskaya.
Elsewhere, oil prices were a little higher, signaling that commodity-led price pressures are a mainstay for now. While prices have come off highs near $130 a barrel, the $100 level still appears well supported.
Benchmark Brent crude futures were up 0.82% at $108.13 a barrel while WTI was 0.83% higher at $102.90 a barrel.
Contact the author at jon.hopkins@proactiveinvestors.com