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Netflix Loses 200K Subscribers
Shares of Netflix (Nasdaq: NFLX) fell 25.73% in after-hours trading on Tuesday after the subscription streaming giant posted negative earnings results.
Financials: Netflix reported earnings per share of $3.53, which was better than expected. But its revenue of $7.87 billion was below estimates.
Subscription Decline: During the first quarter, Netflix lost 200,000 subscribers. This marks the first in over 10 years that Netflix lost subscribers. The company also expects to lose an additional 2 million subscribers in the second quarter.
Problems: Netflix cited four reasons for its subscriber drop: The uptake of connected televisions being out of its control, growing competition in the streaming space, macro factors such as the war in Europe, and password sharing. The company estimated that Netflix password sharing is occurring in over 100 million non-subscriber households, including 30 million in North America.
Geography: The only region where Netflix gained subscribers was in Asia Pacific.
Strategy: To combat these problems, Netflix is exploring lower-priced, ad-supported plans, according to CNBC.
The Good: Despite these challenges, Netflix kept its operating margins at 20% and maintained positive free cash flow.
Numbers: Shares of Netflix are down 50% since hitting a record price in the fall.
Final Thoughts: If the stock price continues to decline, would Netflix be considered a value stock?
Notable Earnings Today: Tesla (Nasdaq: TSLA), Procter & Gamble (NYSE: PG), ASML Holding (Nasdaq: ASML), Alcoa (NYSE: AA), Abbott Laboratories (NYSE: ABT), United Airlines (Nasdaq: UAL), Nasdaq (Nasdaq: NDAQ), Lam Research (Nasdaq: LRCX), Baker Hughes (Nasdaq: BKR), Steel Dynamics (Nasdaq: STLD), Anthem (NYSE: ANTM), Kinder Morgan (NYSE: KMI), Lithia Motors (NYSE: LAD), CSX (Nasdaq: CSX), M&T Bank (NYSE: MTB), Comerica (NYSE: CMA), Equifax (NYSE: EFX), GATX (NYSE: GATX), Crown Castle International (NYSE: CCI), Brandywine Realty Trust (NYSE: BDN), Cohen & Steers (NYSE: CNS), Globe Life (NYSE: GL), Knight-Swift Transportation (NYSE: KNX), Martin Midstream Partners (Nasdaq: MMLP), SL Green Realty (NYSE: SLG), Tenet Healthcare (NYSE: THC).
Notable IPOs Today: QSAM Biosciences, Inc. Common Stock (Nasdaq: QSAM).
Notable Equity Crowdfunding Campaigns Ending Today: BlackHeart Bike Company (StartEngine), QuantmRE (Republic).
Notable Economic Events Today: Existing Home Sales (10:00 a.m. ET), Crude Oil Inventories (10:30 a.m. ET), Beige Book (2:00 p.m. ET).
IMF Raises Alarm on Crypto
Details: The report stressed the importance of multilateral cooperation and new global standards for crypto assets in order to overcome these challenges.
Deeper: New regulations should focus on elements that enable decentralized finance, such as stablecoin issuers, according to the report.
Final Thoughts: Despite the negative tone of the report, most crypto prices ticked up on Tuesday.
The Disadvantages of Defensive Investing
While defensive investing is meant to help investors during times of economic uncertainty, there are a few drawbacks to this strategy.
Stunted Growth: This conservative investing strategy is low risk, but it also means that there will be slow growth.
Can’t Hide: Even with a defensive investing strategy, investors could still get hit by volatility in the market.
Final Thoughts: There’s nothing wrong with a defensive investing strategy, but make sure that you are aware of the risk.
Trends to Watch
Optimism: We Aren’t Necessarily Doomed to a Recession (Bloomberg)
Higher Rent: Blackstone Bets on Campus Housing With $13 Billion Acquisition (The Wall Street Journal)
Fixing a Challenge: How The Dacxi Chain Solves Equity Crowdfunding’s Liquidity Problem (Coin News)
Crackdown: Secret Service seizes more than $102 million in crypto assets (CNBC)
Focus: Why retail investors shouldn’t overdiversify (Financial Times)
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