Did you cancel your Netflix Inc. (Nasdaq: NFLX) subscription?
I didn’t cancel my subscription. So, that makes two of us still here, probably.
Unless you’re sharing my account. I have been getting a lot of weird suggested shows to watch recently. Hmmm…
The world’s largest online streaming company reported its second-quarter results last night. While revenue and earnings were pretty good, subscriber numbers tanked hard.
Paid international subs only grew by about 2.8 million, and paid domestic subscribers actually declined.
Nobody saw that coming. We’re clearly in the “upside down” with NFLX now.
CEO Reed Hastings was unfazed: “There was no one thing. It’s easy to over-interpret the quarter membership adds, which are a bit noisy.”
In a letter to shareholders, Netflix failed to inspire confidence, however. The company blamed the low subscriber growth on its content offerings in the second quarter.
If content is bad now, Netflix, what’s going to happen when The Office and Friends leave?
The Takeaway:
Let’s hop in the wayback machine and set it for this past Monday. I said in the July 15 edition of Great Stuff that “investors just need to chill” when it comes to Netflix earnings. The company hit the earnings whisper number and revenue was spot on.
As for the subscriber numbers … we’ve seen this before. Twice, in fact.
Into the wayback machine again. This time, set it for July 20, 2018.
In the second quarter last year, Netflix reported a subscriber drop that “shocked” Wall Street. It was dubbed a “glitch,” remember?
The same thing also happened in the second quarter of 2016.
It’s almost like this is a seasonal thing investors aren’t paying attention to.
But the brokerage community remembers. And they’re still backing Netflix.
I don’t typically jump on the brokerage-bunch bandwagon (I’m a contrarian at heart), but when they’re right, they’re right.
Today’s plunge in NFLX is an opportunity — don’t miss it.
The Good: What I Bought on eBay
“A used pink bathrobe. A rare mint snow globe. A Smurf TV tray. I bought on eBay.”
I bet you never thought you’d see Weird Al lyrics in a financial e-zine. That’s just how we roll.
EBay Inc. (Nasdaq: EBAY) has come a long way from the Weird Al parody days. No longer is it just a big online yard sale.
The company is a serious online retailer. One even Amazon.com Inc. (Nasdaq: AMZN) has to take seriously.
The company proved that this morning by posting blowout earnings, topping both top- and bottom-line expectations while providing a strong full-year outlook (comparatively speaking).
What’s more, eBay is considering spinning off its successful StubHub and Classifieds divisions, which saw revenue grow 7% and 5%, respectively.
Keep eBay on your radar. Getting in on a StubHub spinoff could be a very big deal.
The Bad: Bad Case of Lovin’ You
No pill is gonna cure UnitedHealth Group Inc.’s (NYSE: UNH) ill.
The health insurance behemoth reported strong second-quarter earnings and revenue, rising past Wall Street estimates faster than the price of insulin.
UnitedHealth also lifted its full-year guidance well above analyst forecasts.
But UNH shares are down nearly 2% today. What gives?
Three words: Medicare for all.
UnitedHealth investors fear that the popular public health option will dominate the 2020 elections.
While many countries that have public health care also have private insurers, a win for Medicare for all would be a big loss for UnitedHealth. Wall Street remains in a holding pattern on UNH, and so should you.
The Ugly: Not-So-Awesome Sauce
This is going to be a bit of a rant. You’ve been warned.
In what may be the two weakest “bullish” notes I have ever seen, both Goldman Sachs and Raymond James upgraded Apple Inc. (Nasdaq: AAPL) yesterday.
Raymond James upgraded AAPL to outperform and issued a $250 price target. Goldman lifted its price target to $187.
Goldman cited “a material slowdown” in revenues but used quite a bit of forecasting math to arrive at its upgrade. It’s some interesting mathematical gymnastics, if you feel like reading it.
Meanwhile, Raymond James said it believes that “Apple plans to bring 5G to a wider range of iPhone models.” Well … duh? Why wouldn’t they, and why wasn’t this already priced in?
When you upgrade on the glaringly obvious and use magical math to justify being bullish on a company, something is horribly wrong.
Based on these research notes alone, I’d be more than hesitant to invest in Apple right now.
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