Coffee With Greta: Netflix Is Bleeding
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Good morning friends!
Futures are higher as traders shake off Netflix’s bleak Q1 earnings report.
Let’s get right to it!
Netflix Plunges on Subscriber Loss
Netflix (NFLX) shares are plummeting 27.5% ahead of the open after the streaming giant reported its first subscriber loss in more than 10 years.
The company reported earnings of $3.53 per share vs $2.89 expected.
Revenue of $7.78 billion missed analysts’ estimates of $7.93 billion.
Netflix lost 200,000 subscribers last quarter, sharply missing its own forecast for a gain of 2.5 million and analysts’ expectations for growth of 2.73 million.
The company said shutting down its service in Russia resulted in the loss of 700,000 subscribers.
Netflix forecast a sharper contraction in Q2, expecting to lose 2 million more this quarter.
It blamed “revenue growth headwinds” on password sharing among its subscribers and increased competition from other services.
IBM Rallies on Strong Q1 Earnings, Outlook
International Business Machines (IBM) shares are 2.4% higher in premarket trade after beating Q1 expectations.
The tech giant reported earnings of $1.40 per share on $14.2 billion in revenue.
That was better than analysts’ expectations for EPS of $1.38 on $13.85 billion in revenue.
CEO Arvind Krishna said, “Demand for hybrid cloud and AI drove growth in both Software and Consulting in the first quarter. Today we’re a more focused business and our results reflect the execution of our strategy. We are off to a solid start for the year, and we now see revenue growth for 2022 at the high end of our model.”
Procter & Gamble Earnings Boosted by Price Hikes
Procter & Gamble (PG) shares are up 1% ahead of the open after beating Q1 expectations.
The consumer goods giant reported adjusted earnings of $1.33 per share on $19.38 billion in revenue.
That was better than analysts’ expectations for adjusted EPS of $1.29 on $18.73 billion in revenue.
Revenue was up 7% year-over-year but sales volume, which strips out currency and price changes, only rose 3%.
Procter & Gamble’s health care sector saw the strongest growth with organic sales rising 16%.
Sales rose 10% in the fabric and home care division as well as the baby, feminine and family care segment.
Grooming sales rose 8% and beauty sales rose just 3%.
Procter & Gamble raised its 2022 revenue growth forecast to a range of 4% to 5% and said it expects earnings to be at the lower end of its range of 3% to 6%.
Tesla Earnings On Deck
Tesla (TSLA) shares are up 0.7% ahead of the open as traders gear up for the electric automaker to report Q1 earnings after the market close today.
Tesla already reported record deliveries in the first quarter.
The automaker delivered more than 310,000 vehicles last quarter and produced more than 305,000.
Analysts are expecting $17.659 billion in Q1 revenue and earnings of $2.26 per share.
Oil Rebounds On Supply Concerns
Oil prices are rebounding today as concerns about supply weigh on the market.
West Texas Intermediate crude futures are up more than 1% to over $103 bbl while Brent crude futures are up 1%, topping $108 bbl.
A new report from OPEC+ shows the group produced 1.45 million barrels per day below its production target in March as Russian output fell.
Russia is part of OPEC+.
Libya has also been forced to shutdown several oil facilities due to protests.
The American Petroleum Institute reported Wednesday that U.S. crude stocks fell by 4.5 million barrels last week.
The Energy Information Administration releases its weekly crude inventory report today.
Mortgage Demands Plummets
Mortgage demand has plunged to nearly half of what it was a year ago.
The Mortgage Bankers Association reports total application volume fell 5% weekly last week and was down nearly 50% year-over-year.
The drop comes as the average 30-year contract mortgage rate rose to 5.2% from 5.13%.
That rate was 3.2% a year ago.
Refinance applications tumbled 8% weekly and 68% annually.
New purchase applications were down 3% last week and 14% lower compared to a year ago.
Existing Home Sales Preview
The National Association of Realtors releases its existing home sales report for March at 10:00 a.m. ET.
That data is expected to show home sales fell last month to a seasonally adjusted annual rate of 5.75 million units.
Pending home sales tumbled 4.1% in February.
Those pending sales represent contracts signed for a purchase expected to close in 30 to 60 days.
The spring buying season is expected to be tight as supply remains low and mortgage rates spike.
In Case You Missed It
- The Census Bureau reported housing starts rose 0.3% in March to a seasonally adjusted rate of 1.79 million units vs 1.73 million expected. Single-family starts fell 1.7% while multi-family starts rose 7.5%. Building permits rose 0.4% last month to a SAAR of 1.87 million units vs 1.82 million expected. Single-family permits tumbled 4.8% while multi-family permits surged 10.9%.
- The International Monetary Fund slashed its global economic growth forecast for 2022 and 2023. The group now expects global GDP to expand 3.6% this year and next. The IMF’s chief economist cited the war in Ukraine for that downgrade. The group also hiked its 2022 inflation forecast. The IMF expects 5.7% inflation in advanced economies this year and 8.7% inflation in developing economies.