Daily Brief: Netflix Reported Better-Than-Expected Earnings, But Disney's Nipping At Its Heels

Daily Brief: Netflix Reported Better-Than-Expected Earnings, But Disney's Nipping At Its Heels

about 3 years ago3 mins

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Netflix is in a Good Place: the streaming giant announced better than-expected earnings late on Tuesday, and its shares initially jumped 10%.

What does this mean?

Netflix welcomed plenty of new subscribers when lockdowns kicked in early last year, but that growth slowed significantly in the third quarter. So investors might be relieved to see it was just a blip: the company gained almost 9 million new subscribers last quarter, blowing past analysts’ expectations of 6.5 million. And that figure’s arguably the most important one of all: it gives a good idea of how the company’s future income will look.

Netflix subscriber growth

Still, Netflix could boast a few other good numbers too: it revealed it’s expecting to earn enough cash this year to fund its own operations, rather than rely on investors or banks. The company even said it’s likely to buy back its own stock – a move that would push up its share price and make its investors very pleased indeed.

Why should I care?

For markets: Winner takes all.

Netflix promised to add another 6 million new subscribers this quarter, but the bigger question is whether it’ll outdo its streaming rivals – especially with Disney+ ramping up much quicker than expected. Its 74 million subscribers is a long way off Netflix’s 204 million, sure, but the Mouse House’s platform did only launch 14 months ago. That fact isn’t lost on investors: Disney’s shares have climbed 40% in the last three months, while Netflix’s have barely moved.

Everyone has Netflix

Zooming in: Someone make it stop.

Then again, this town is big enough for the both of them. That might be why they ended up taking the top spots in last year’s most-streamed content, with Netflix dominating the top 10 television series of 2020 and Disney leading the way in movies. Bored kids and exasperated parents might’ve had something to do with the latter: Disney+ subscribers played Frozen II for 15 billion minutes between them.

Keep reading for our next story...

Investors Think Bitcoin's Getting Crowded

Bitcoin image

So much for social distancing: a new survey from Bank of America (BoA) revealed investors think bitcoin is the world’s “most crowded” trade.

What does this mean?

Every month, BoA asks its clients – an assortment of investment managers who look after a $600 billion between them – which market they think too many investors are buying into. And for the first time since 2017, it was bitcoin that took the top spot. That revelation might give skeptical investors cause for concern: it means there are now so many investors buying into the cryptocurrency, there might be no one to sell to if it suddenly falls out of favor…

Evolution of “most crowded trade”

Why should I care?

Zooming in: Bubble trouble.

You don’t need to look far to find one investor arguing that bitcoin’s in a bubble and another taking the opposite stance. But one thing’s for sure: its movements are definitely unprecedented. One hedge fund recently pointed out that bitcoin’s survived even after three drops of 80% in less than 10 years – something that’s never happened to another market. Then again, the firm also reckons the market could just be trying to find the right price for a (relatively) new asset – and says bitcoin could eventually become more stable.

Bitcoin price (BTC)
Bitcoin price (BTC) | Source: Coinbase

For markets: Easy answers.

BoA’s survey also revealed its clients were feeling pretty optimistic about global growth: the portion of investment managers that said yes, the global economy is in the early stages of an expansion was at its highest in a decade. They’re putting their money where their mouth is too: the firms revealed they’d invested in energy, materials, and banks this month – all sectors that are sensitive to a pick-up in economic growth.

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