Netflix falls short of analyst expectations


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Last Week’s Highlights

Netflix revenue misses forecasts

Netflix reported revenues that fell short of analysts’ expectations for the second quarter of the year. This led to a 9% drop in the value of its stock. Although the company added 5.9 million new streaming customers, the forecast for revenue in the third quarter was weaker than expected. Netflix has been facing increasing competition in the U.S. streaming market and launched a cheaper tier with advertising and measures to combat password sharing. Although its earnings beat predictions, investors sold shares to take profits, and Netflix is expected to look for new strategies to accelerate its growth.

Pfizer gets drug approval in Europe

The European Medicines Agency has recommended marketing Pfizer’s Abrysvo drug in Europe, boosting the company’s stock. Abrysvo is a treatment for respiratory syncytial virus that can be used in children, adults, and pregnant women, providing passive immunity to six-month-old infants. Although the recommendation has yet to be confirmed by the European Commission, this news comes at an opportune time for Pfizer, as it recently suffered damage to one of its factories due to a tornado, which could cause shortages of sterile injectable drugs. Despite this, analysts continue to show confidence in the company, with a majority rating of “moderate-buy” and a 23.37% upside potential for its shares.

Coming Up This Week

Disney looks for strategic partnerships for ESPN

Disney-owned sports network ESPN has been in talks with the NBA and NFL to establish strategic alliances, which would give it access to high-level sports content in a complicated media landscape. These discussions have considered possible minority investments by the leagues in ESPN. However, there are complications due to the NFL’s search for a partner for its media assets, which could create conflicts of interest. This could cause tension with competitors also seeking sports broadcast rights, both traditional media and emerging streaming platforms. In addition, ESPN would face increased pressure to maintain objective sports coverage, especially for partner leagues, and there could be similar expectations from other leagues such as Major League Baseball and the National Hockey League in any such deal. On Wall Street, analysts have a moderate buy consensus rating for Disney stock, with an average price target of $120.53 per share, which would imply an upside potential of 38.27%.

Meta’s Threads is already struggling

Meta’s new Threads platform has faced difficulties following its launch. Although it initially attracted many users, they have begun to question whether it is really necessary to add another tool to their already crowded social network. The number of people active daily has dropped drastically since the peak reached on July 7, declining by 70%. In addition, content moderation is under scrutiny by regulators, and some investors are wondering how Meta will generate revenue with Threads. The company is now focused on retaining users and consolidating its base. While analysts are confident Meta will overcome these challenges, it has an arduous road ahead. Meta Platforms stock, despite the hurdles, is still considered a “strong buy” by the analyst consensus.

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Market News

US stocks finished mixed on Friday, with the Dow Jones index rising marginally to post its 10th consecutive day of gains, its longest rally in nearly six years. The index was boosted by gains of more than 1% from Procter & Gamble and Chevron.

Meanwhile, Nvidia and Meta Platforms lost more than 2% in a choppy session and Netflix was down 2.3%, for the second straight day, after the video streaming company’s quarterly results this week failed to impress.

Analysts attributed the day’s volatility to monthly options expiration and special rebalancing in the Nasdaq 100 after the close of trading. At the end of the week, the S&P 500 was up 0.7%, the Nasdaq was down 0.6%, and the Dow was up 2.1%.

Wild Card

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