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Streaming success
Getty Images Tech is flexing its muscles again as Netflix (NFLX) reported a solid batch of earnings and Q4 results. Shares soared 8.7% AH on Tuesday to $534.80, building on a 1.3% gain seen during the regular session after the company revealed it would ramp up its investments in live programming. A $5B-plus deal with combat sports leader TKO Group (TKO) will grant exclusive rights to Raw - the No. 1 show on USA Network (CMCSA) - as well as other programming from World Wrestling Entertainment, and bring star Dwayne "The Rock" Johnson to the TKO board.
By the numbers: Netflix's global streaming paid memberships hit 13.1M in Q4, marking the strongest-ever final quarter for net additions, while the company ended the year with 260.3M subscribers, marking a record for the streamer. Revenue, meanwhile, returned to double-digit growth, rising 12.5% to $8.83B, beating consensus for $8.71B. Elsewhere, operating income dipped to $1.5B, but despite a Q4 operating margin of 16.9%, the fiscal 2023 operating margin hit 21% - up from 18% in 2022 and ahead of the company's 20% margin target. Free cash flow also remained strong, at $1.6B, and net cash from operations was $1.7B; both figures were down sequentially but up heavily from year-ago totals of $332M and $444M respectively.
"Despite a moderated pace of growth from its heydays, Netflix has proven a competitive advantage in expanding margins and bolstering cash flows needed to maintain its moat amid increasing competition," wrote SA Investing Group Leader Livy Investment Research. "Looking ahead, Netflix is expected to stay resilient in 2024, with tailwinds including ARM expansion, cyclical ad spend from the Summer Olympics and U.S. elections, and the advent of AI."
What to watch: Netflix (NFLX) is shining bright in an increasingly crowded streaming space, with rivals struggling to reach profitability and cutting down on their content spend. In contrast, the company behind the streaming revolution is looking forward to a strong content slate made possible by its successful ad-supported service plan and paid sharing (a.k.a. the password-sharing crackdown). "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," Netflix wrote in a shareholder letter, adding to expect consolidation among its competitors, especially players with large and declining linear networks. (28 comments)
   | | Automotive
iCar
Various media reports suggest that Apple (AAPL) has pulled back on its car project once again, with a new release date in 2028. The project is also said to be in a make-or-break position, while the level of autonomy has downshifted dramatically to Level 2+ from Level 4. Apple's Project Titan has been around since 2014, spurring debate on whether the company could match the margins it generates on its tech products with a vehicle. While Alphabet's (GOOG) Waymo, Huawei, Baidu (BIDU), and Xiaomi (OTCPK:XIACY) have all introduced electric vehicles, Apple's biggest splash in the automobile sector to date was its CarPlay software, as it has not yet shown off a prototype. (49 comments)
| | Global
NATO expansion
Turkey's parliament has finally approved Sweden's entry into the North Atlantic Treaty Organization after months of deliberations, leaving Hungary as the only holdout to the alliance's expansion in response to Russia's invasion of Ukraine. Turkish President Recep Tayyip Erdogan's final signoff is expected in the coming days. Lawmakers attributed the ratification to Sweden's tougher stance on Kurdish militants, while Erdogan previously signaled that the country's desire to buy Lockheed Martin (LMT) F-16 fighter jets was also a factor. Once Sweden joins the alliance, Russia will become the only non-NATO country bordering the Baltic Sea and its warships may be forced to pass near NATO-controlled shores en route to the Atlantic.
| | Tech
Focus on AI
SAP (SAP) rose 6% to near record highs in premarket trading after announcing a company-wide restructuring program that will emphasize artificial intelligence growth. The German software giant plans to spend around €2B on the shakeup that'll cover 8,000 positions, but expects to end this year with a headcount similar to current levels. The move is part of SAP's aim to "fully capitalize on the opportunity" of the next wave of technology, CFO Dominik Asam declared, adding that it means "we need to reskill our workforce, really focus on that." SAP also reported solid Q4 results overnight, as well as a strong outlook for the year.
| | Today's Markets
In Asia, Japan -0.8%. Hong Kong +3.6%. China +1.8%. India +1%.
In Europe, at midday, London +0.4%. Paris +0.9%. Frankfurt +1.3%.
Futures at 7:00, Dow +0.2%. S&P +0.4%. Nasdaq +0.7%. Crude -0.3% to $74.12. Gold +0.5% to $2,034.90. Bitcoin +3.4% to $40,207.
Ten-year Treasury Yield -3 bps to 4.11%.
Today's Economic Calendar
7:00 MBA Mortgage Applications
9:45 PMI Composite Final
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $28B, 2-Year FRN Auction
1:00 PM Results of $61B, 5-Year Note Auction
Companies reporting earnings today » |
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Focus on AI
