Global markets were mixed overnight, as Wall Street’s main indices managed to end the session a touch higher. The big news was Netflix which we discuss below.
In this week's stock market movers podcast – it was another quiet news week on the NZX so Jeremy took the chance to talk about his views on the Cricket World Cup for a couple of minutes, and talk about Z Energy and their recent quarterly update and spend some time looking at some more Berkshire Hathaway Annual General Meetings.
To listen to the episode: CLICK HERE
Stock in Focus: Netflix (NFLX:Nasdaq)
Netflix shares tumbled -10% overnight as it added fewer quarterly subscribers than Wall Street expected and its US customer base shrank as its programming failed to draw new viewers, jarring investors ahead of looming competition.
Netflix lost 130,000 US customers for the first time in nearly a decade, and analysts had forecast a gain of 352,000 in the United States. The world's dominant subscription video service said it hooked 2.83 million new paid streaming subscribers outside the US, which was also below analyst expectations of 4.8 million. Netflix said "Our missed forecast was across all regions, but slightly more so in regions with price increases".
Netflix has staked its future on global expansion and creating original TV shows, movies and documentaries to attract new customers and keep the existing ones paying monthly subscription fees. The problem is that with intensifying competition, there is no guarantee Netflix has the pricing power needed to raise prices without bleeding users.
Looming in November is the launch of Disney+, seen as a formidable entrant into the streaming market, and original programming from Apple. AT&T and Comcast have said they plan their own offerings next year. Given NFLX have not had to deal with serious competition to date, it will be interesting to see how things play out.
We currently have a HOLD recommendation on Netflix.
Members should look out for a full update on Netflix to be released in our weekly report.
Australia & New Zealand Market Movers
The Australian share market was lower on Thursday (ASX 200 index -0.36%) and the Aussie dollar made gains after reasonably strong jobs numbers in Australia provided no additional weight to the case for further interest rate cuts. Woodside Petroleum led a broadly weaker energy sector on Thursday after reporting second quarter sales 40 per cent weaker than the previous quarter. Major maintenance work at its Pluto LNG plant in Western Australia and lower gas export prices were behind the weak result. South32 has reported a 69 per cent jump in full-year coking coal production, beating analyst estimates, as the diversified miner ramped up production at its Illawarra project.
The New Zealand market rallied to a fresh record high yesterday (NZX 50 index +0.81%) as Meridian Energy and Z Energy led the market higher. In stock news, Mercury NZ said it relied on peaking capacity of its Waikato hydro generation in the June quarter, in a period when low lake inflows sapped production. Spark New Zealand increased after welcoming the Commerce Commission's confirmation that it will deregulate the telecommunications company's resale copper voice services.
3 Things Markets Will be Watching this Week
- US Corporate earnings season gets into gear this week.
- Chinese economic growth and activity data are amongst the highlights this week. In the US, retail spending and the Federal Reserve’s Beige Book will be keenly observed ahead of the next interest rate decision.
- In Australia, the June employment report will hog the headlines towards the end of the week.
Have a Great Day,