📈 Netflix Well-Positioned For Strike, Q2 2023 Earnings
The streaming giant saw nearly 6 million net new subscribers join the platform in the quarter, more than tripling industry estimates. This surge in subscriber growth may be due to Netflix's recent crackdown on password sharing, where they saw days of nearly 100,000 sign-ups in the quarter.
Revenue: $8.19 billion (vs. 8.29 billion expected) ❌
Earnings: $3.29 per share (vs. $2.86 expected) ✅
Subscribers: +5.89 million (vs. 2.1 million expected) ✅
📉 Despite strong subscriber growth, Netflix shares fell ~8% the following day due to weaker-than-expected Q3 guidance.
While this disruption rattles the streaming industry, Netflix has a unique resilience due to its long pipeline of content and its diversified production network that expands beyond Hollywood.
This advantage is enabling Netflix to maintain a steady content flow for its viewers during a time when competitors grapple with production freezes, adding to Netflix’s outperformance in the sector.
🔥 $NFLX stock is up ~45% this year and over 130% from its 2022 lows.
Ironically, these production stoppages may provide a short-term benefit to streaming companies by bolstering their free cash flow.
Netflix increased its free cash flow forecast from $3.5B to over $5B for the fiscal year, attributing this to lower content-related spending caused by industry strikes and shifts in production schedules.
The last major instance of production disruption was during the onset of COVID-19 in March 2020, a period when free cash flow grew among Hollywood conglomerates.
⚡️ Tesla Drops 10% on Q2 Earnings Report, Elon Gives Updates
This week, Tesla unveiled its Q2 2023 earnings report, boasting a new record in quarterly revenue. The EV giant exceeded revenue (and earnings-per-share) estimates, reporting $24.93 billion compared to the forecasted $24.47 billion.
Tesla employed price reductions and incentives to enhance consumer accessibility, a move which paid off with stronger-than-expected revenue, but resulted in lower margins.
Akash Sriram / Company Statements
📉 $TSLA held steady after the initial report but began to dip during the earnings call. Shares dropped nearly 10% the following day.
⚡️ Tesla Energy and Services: Tesla's energy business showed strong performance with revenue from energy generation and storage, such as solar installations and backup batteries, jumping 74% YoY to $1.51 billion.
The growth in Tesla's vehicle fleet also resulted in a 47% rise in revenue to $2.15 billion from "services and other" sources, which vehicle repairs and maintenance.
🤖 Tesla Dojo: Elon Musk unveiled Tesla's initiative to invest over $1 billion into developing its AI supercomputer, named Dojo amid a shortage of Nvidia's A100 tensor core GPU clusters.
The supercomputer aims to fill the void created by Nvidia's shortage of GPUs, which are crucial to training Tesla's Full Self-Driving (FSD) software and Optimus humanoid robots.
“Frankly, if they (Nvidia) could deliver us enough GPUs, we might not need Dojo.”
Earlier in the week, in a significant breakthrough, the company built its first Cybertruck at its Austin plant after two years of delays. With an online tracker suggesting over 1.9 million preorders, Tesla is setting ambitious production targets.
🔥 Despite the nearly ~9% drop this week, $TSLA is still up 140% this year.
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📈 The Stock Market is Rebounding, Recession Odds Decrease
Despite concerns over an economic slowdown, the stock market has continued to perform strongly, reflecting confidence in the economy's resilience.
📈 The S&P 500 is up over 18% this year after dropping ~18% in 2022.
CNBC / U.S. Bureau of Labor Statistics
Meanwhile, Wall Street executives have been signaling that the worst may be over for the industry. Despite another quarter of disappointing performances, top banking figures have noted improved sentiment and activity, evidenced by “green shoots” that emerged across businesses towards the end of Q2.
This positive outlook on Wall Street’s future, coupled with slowing inflation and reduced recession odds, may be the reason for the stock market’s recent performance.
🎙 Top Discussions This Week
Pier-Oliver / @po.investment
Mr. Financial / @mr.financial
🗞️ What else you might’ve missed: