Daily Brief: Netflix Is The Real Winner Of Squid Game

Daily Brief: Netflix Is The Real Winner Of Squid Game

over 2 years ago3 mins

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Netflix announced better-than-expected quarterly results late on Tuesday, even if the streaming giant refused to admit what moral compromises it made to earn this kind of money.

What does this mean?

The influx of subscribers that Netflix saw at the height of the pandemic has been slowing down ever since the world got back to business. But things are looking up: the company brought in a better-than-expected 4.4 million subscribers last quarter, taking the total count to 214 million. Netflix is predicting that it’ll add 8.5 million subscribers this quarter too, which has put investors’ minds at ease: this sort of subscriber growth bodes well for the company’s future profit, which might be why they initially sent its stock up 2% after the announcement.

Netflix subscribers

Why should I care?

For markets: This could be a good week for Netflix.

The 8.5 million subscribers Netflix reckons it’ll add next quarter is more than the 8.3 million analysts were expecting. That could be important: new analysis from Goldman Sachs has shown that Netflix’s forecast for the fourth quarter of the year usually comes in below expectations, which tends to lead to a decline in Netflix’s stock price over the following week. But since Tuesday’s forecast bucks that trend, the next seven days for Netflix’s stock could do too.

Netflix stock

The bigger picture: A whole different Squid Game.

Netflix has been making more international shows recently, in a strategy that seems nothing short of a win-win: production costs tend to be cheaper abroad than they are in the US, and a wider range of content should help bring in more subscribers. The approach certainly seems to be working: the company thinks a little-known show called Squid Game – which cost just $21 million to make – is now worth almost $900 million, with more than 130 million viewers having watched at least a few episodes of the show.

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Johnson & Johnson Reported Better-Than-Expected Earnings

JJ image

Johnson & Johnson (J&J) reported better-than-expected quarterly earnings on Tuesday, as the healthcare giant sticks with the clean-living habits it picked up over lockdown.

What does this mean?

You’d have thought J&J would’ve made hay during last year’s health crisis, but the pandemic – which put surgeries and treatments on hold – proved just as disruptive for the company as anyone. Now, though, it’s come back swinging: revenue from J&J’s medical device segment grew 8% last quarter versus the same time the year before. The part of J&J’s business that has benefited from all the chaos, meanwhile, is going from strength to strength: the company’s pharmaceutical division – which sold over $500 million worth of its single-shot vaccine last quarter – saw revenue climb 14% from a year ago.

JJ stock
Source: Google Finance

Why should I care?

The bigger picture: Get that vaccine out pronto.

J&J also upped its profit forecast for the full year, probably because its vaccine is still in high demand. Not just domestically, but overseas too: only 3% of adults in low-income countries have had the jab, and J&J’s single-shot offering – which is easier to transport and store than the two-dose alternatives – is the perfect contender to boost that stat. It’d better get cracking: economists reckon 16.5 billion more shots will be needed to vaccinate the entire world, on top of the 6.5 billion administered so far.

Zooming out: What goes around keeps coming around.

J&J’s saved plenty of lives with its vaccine, so it’s probably a bit irked that no one can give it a pass for its cancer-causing baby power from a few years back. The company had to set aside $4 billion last year alone to deal with the allegations, and it’s still facing tens of thousands of legal cases. So now, it’s decided to create a separate business altogether – one that has less money to its name in a wily bid to force litigants to settle for less.

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