Daily Brief: We’re Watching Now, Netflix

Daily Brief: We’re Watching Now, Netflix

over 1 year ago3 mins

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Netflix reported much better-than-expected results late on Tuesday.

What does this mean?

Netflix has announced a falling subscriber count for two straight quarters this year, so the odds were stacked against it coming into this earnings season. But it managed to prove everyone wrong: the streaming giant said projects including “The Gray Man” and “Purple Hearts” were real needle-movers last quarter. That helped it add over 2.4 million subscribers last quarter, smashing through its own projection of one million, and in turn pushing its revenue and profit to both tidily beat analysts’ expectations. And since Netflix predicted even more growth this quarter, the news was good enough to convince investors to brush off the company’s worse-than-expected profit outlook: they sent its shares up 14% after the news.

Netflix stock
Source: Google Finance

Why should I care?

The bigger picture: Start-stop entertainment.

Netflix will want to keep that subscriber growth going, which might be why it’s decided that downgrading the user experience may be just the way to go. The streaming giant’s bringing forward the launch of its ad-supported service to next month, in hopes that its lower-cost $6.99 version – which slots about five minutes of commercials into every hour of content – will appeal to bargain-hunting entertainment-seekers who can’t get the same low price from rivals Disney+ or HBO Max. All that cash from advertisers would be a nice bonus too: some analysts predict that could make Netflix around $3 billion in extra revenue by 2025.

Netflix subscribers
Source: The Wall Street Journal, Netflix

Zooming out: Netflix won’t share.

Determined to put an end to the bonding experience of sharing your Netflix password with a special someone, the streaming giant revealed the new “Profile Transfer” feature this week. Netflix would have you believe it’s designed to make big moves and break ups easier by switching your history and recommendations to a new account, but it’s probably a simple bid to clamp down on the more than 100 million households that access the service using shared accounts.

Keep reading for our next story...

Foxconn Thinks It Foxcan

Foxconn image

iPhone maker Foxconn announced a lofty goal on Tuesday to manufacture nearly half of the world’s electric vehicles (EVs).

What does this mean?

As the world’s biggest contract electronics manufacturer, ​​with nearly 50% of the world’s information and communication tech market under its sway, there’s little reason to doubt Foxconn’s ability to muscle into new industries. That’s doubly true given that the company – which plans to manufacture the EVs for other firms – is making all the right moves so far: it’s built prototypes from scratch to show what it can do, and has already formed cozy partnerships with established carmakers and EV startups alike. With shrewd strategies like that, it’s no wonder Foxconn’s showing such moxie: the company’s aiming to have 5% of the global EV market – worth about $31 billion – as soon as 2025, and hopes to manufacture nearly half of all the world’s EVs in the long run.

EV market size projection
Source: Statista

Why should I care?

The bigger picture: There is a world elsewhere.

This move won’t just introduce Foxconn to a new industry, it’ll bring the firm to crucial new regions too. The lion’s share of Foxconn’s tech manufacturing has been based in China to date, but with geopolitical tensions between Taiwan and the People’s Republic on a steady boil, it makes sense that the firm’s casting around for some new friends right now. And with new staff in the EV division based exclusively outside of China, this latest move sure shows that Foxconn's shifting gears.

Zooming out: Everyone’s panning for gold.

It’s not a bad time to be breaking into the EV industry: it’s a market where winners can win big right now. Just take a look at BYD, the Chinese EV company, which announced this week that its quarterly profit could jump 365% to a new record high. With growth like that on the table, it’s no wonder that the industry’s caught Foxconn’s eye.

BYD sales growth
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