Coffee With Greta: Stocks Drop After Netflix Earnings
DJIA Futures: -113 (-0.3%)
SPX Futures: -26 (-0.6%)
NASDAQ Futures: -112 (-0.9%)
Good morning friends!
Futures are falling as traders digest the latest batch of earnings and Treasury yields pop on inflation concerns.
Let’s get right to it!
Netflix Reports Mixed Q1 Results, Delays Crackdown On Password Sharing
Netflix (NFLX) shares are down 2.6% ahead of the open after reporting mixed Q1 results.
Here’s how the streaming giant’s results compared to analysts’ estimates:
- EPS: $2.88 vs $2.86 expected
- Revenue: $8.16 billion vs $8.18 billion expected
Netflix also announced it is delaying the rollout of its password-sharing crackdown in the U.S. after seeing an impact on subscriber growth from the initiative in international markets.
That crackdown was supposed to begin late in the first quarter but the company is now planning to do it in the second quarter.
Netflix estimates 43% of its global user base share accounts and claims that has affected its ability to invest in new content.
Users will be required to set a “primary location” for their account and can then establish up to two “sub accounts” for extra fees.
The company said it has seen increased revenue as a result of the paid-sharing option in markets where it has already been rolled out.
United Airlines Beats Q1 Expectations, Forecasts Q2 Profit
United Airlines (UAL) shares are slipping 0.7% in premarket trade despite reporting better-than-expected Q1 results.
Here’s how the carrier’s results compared to analysts’ estimates:
- Loss per share: $0.63 vs $0.73 expected
- Revenue: $11.43 billion vs $11.42 billion expected
United’s revenue per available seat mile jumped more than 22% year over year.
Unit costs rose 4% annually due to higher fuel prices, but were down 0.1% when stripping out fuel.
The airline expects to report adjusted earnings of $3.50 to $4 per share in the second quarter as the peak summer travel season begins.
United also expects revenue to rise 14% to 16% year over year with capacity up 18.5%.
Morgan Stanley Drops Despite Earnings Beat
Morgan Stanley (MS) shares are falling 4.0% ahead of the open despite beating Q1 expectations on the top and bottom line.
Here’s how the bank’s results compared to analysts’ estimates:
- EPS: $1.70 vs $1.62 expected
- Revenue: $14.52 billion vs $13.92 billion expected
Earnings were down 19% year over year while revenue fell 2%.
Morgan Stanley’s wealth management revenue jumped 11% from a year ago to $6.56 billion, in line with estimates.
Fixed-income trading revenue beat expectations at $2.58 billion and equities trading revenue also topped estimates at $2.73 billion.
Investment banking revenue tumbled 24% annually to $1.25 billion but still topped estimates for $1.2 billion.
U.K. Inflation Surges
The U.K. released its March consumer price index overnight, which showed inflation surging.
The U.K. CPI rose 10.1% year over year vs expectations for 9.8%.
On a monthly basis, the CPI rose 0.8% vs 0.5% expected.
The high inflation reading sent U.S. Treasury yields higher overnight, pushing down stocks.
The 2-year yield is up 5 basis points at 4.25% while the 10-year yield is also up 5 basis points at 3.63%.
Mortgage Demand Drops As Rates Jump
Mortgage demand tumbled last week as rates increased.
The Mortgage Bankers Association reported purchase applications dropped 10% weekly and were down 36% year over year.
Refinance applications fell 6% weekly and 56% annually.
The drop came as the average 30-year fixed rate increased to 6.43% from 6.30% the previous week.
MBA’s deputy chief economist said, “Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act.”