Netflix Surges Upon Strong Earnings Beat

Author

Adam Garcia
October 18, 2024

Good morning. It's October 18th, and in today’s edition, we'll look at Netflix and P&G’s positive earnings, CVS’ continued troubles as its CEO steps down, and an energy stock that is surging in premarket trade.

Previous Close 📈

The Dow closed at an all-time high on Thursday, boosted by a rally in Travelers, while the S&P 500 hit a fresh intraday high before ending slightly lower. The Nasdaq Composite finished modestly higher. All three major indexes are on track for their sixth straight positive week.

Futures

Dow futures were little changed Thursday night, down 28 points. S&P 500 and Nasdaq 100 futures are similarly flat. Investors are reacting to Netflix’s post-earnings rally, with shares up over 4% after the company exceeded Wall Street expectations. Attention is now turning to the earnings reports from American Express and Procter & Gamble.

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What to Watch

This morning, Procter & Gamble Company (NYSE: PG), Schlumberger N.V. (NYSE: SLB), Fifth Third Bancorp (NASDAQ: FITB), Comerica Incorporated (NYSE: CMA), and Acme (NYSE: ACU) will all share their quarterly earnings.

On the economic front, the Housing Starts and Building Permits data for September will be published at 8:30 a.m. ET.

Additionally, Federal Reserve Governor Christopher Waller is scheduled to speak at 12:10 p.m. ET, where he will provide insights into current monetary policy.

FMCG

Procter & Gamble Posts Earnings Beat, Holds Full-Year Guidance as Sales Slip

Procter & Gamble (PG) reported better-than-expected fiscal first-quarter profit, despite a decline in sales.

For the quarter ending September 30, the consumer goods giant posted a net income of $3.96 billion, or $1.61 per share, down from $4.52 billion, or $1.83 per share, a year ago. However, core earnings per share, which exclude nonrecurring items, rose to $1.93, beating analysts' expectations of $1.90.

Sales, on the other hand, fell by 0.6% to $21.74 billion, missing the estimated $21.99 billion. The drop in sales was attributed to weakness in the beauty and baby, feminine, and family care segments, which offset gains in health care and fabric and home care.

Despite the sales decline, P&G is maintaining its full-year guidance, forecasting sales growth between 2% and 4% and core EPS growth in the range of 5% to 7%.

Year-to-date, the company’s stock has rallied 16.9%, outperforming the Consumer Staples Select Sector SPDR ETF’s 13.9% gain, though it trails the S&P 500's 22.5% increase.

Media and Entertainment

Netflix Reports Strong Earnings, Prepares for Potential Price Hikes

Netflix shares are climbing as much as 6% in premarket trading.

The streaming giant beat third-quarter earnings expectations and gave a strong outlook for the next quarter.

The company reported $9.83 billion in Q3 revenue, surpassing analyst projections of $9.78 billion, marking a 15% year-over-year increase. The earnings per share (EPS) for the quarter came in at $5.40, beating expectations of $5.16.

Netflix added 5.07 million new subscribers in Q3, driven by popular content like The Perfect Couple and Nobody Wants This, exceeding analysts' expectations of 4.5 million.

The company anticipates even higher subscriber growth in Q4, citing upcoming releases like Squid Game season 2 and NFL Christmas Day games.

For the fourth quarter, Netflix forecasts revenue of $10.13 billion, ahead of Wall Street’s $10.01 billion estimate. With potential price hikes on the horizon, analysts expect the stock’s momentum to continue through the end of the year.

Pharmaceuticals

CVS Names David Joyner New CEO, Shares Drop After Leadership Change

David Joyner will step in as the new CEO at CVS Health, replacing Karen Lynch, who is stepping down after reaching an agreement with the board.

The leadership change is taking effect today, with Joyner, who currently serves as the president of CVS Caremark, assuming the roles of both president and CEO.

The decision to replace Lynch comes after a challenging year for the company, which has faced multiple profit forecast cuts due to rising medical costs in its insurance division.

CVS shares are falling by 11% in premarket trading.

CVS Health's Chairman, Roger Farah, is confident in the decision, stating that the board believes the leadership shift is well-timed and that Joyner is the right person to guide the company forward.

Additionally, CVS is exiting its core infusion services business and plans to either sell or close 29 related regional pharmacies in the coming months. This move is part of a broader strategy to streamline operations amidst financial difficulties.

The leadership transition follows months of struggles for CVS as it grapples with a changing healthcare landscape.

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Movers and Shakers

Pineapple Energy [PEGY] - Last Close: $5.51

Pineapple Energy’s stock is surging nearly 75% in premarket trading today.

The company announced a move yesterday that will save them nearly $480,000.

They terminated a lease for their former office, which would have cost them $210,000 per year until 2027.

By ending the lease early, they will no longer have to pay those high rent costs, helping them cut expenses significantly.

While they paid a one-time fee to exit the lease, this cost will be spread out over 14 months.

Investors are seeing this as a smart financial decision, boosting confidence in the company's future, which is driving up the stock price.

My Take: The stock has been consistently falling in value and recently conducted a 1:50 reverse stock split to protect itself from being delisted. Tread cautiously if you wish to invest here.

D-Market Electronic Services [HEPS] - Last Close: $2.20

D-Market Electronic Services, the parent company of Hepsiburada, is seeing a 75% increase during premarket trading because of a major acquisition.

Kaspi.kz, a large e-commerce player from Kazakhstan, has agreed to buy 65.41% of Hepsiburada's shares.

This deal will bring in over $1 billion in investment and is expected to strengthen Hepsiburada's position in the Turkish e-commerce market.

Investors are excited because Kaspi.kz’s experience and resources could help Hepsiburada grow even further.

My Take: The stock has been doing well and is nearly 31% up on a year-to-date basis. Keep an eye on this one for future growth.

Tenon Medical [TNON] - Last Close: $3.43

Tenon Medical is up 40% during premarket trading.

The firm has received three new U.S. patents. These patents further strengthen the company’s portfolio, particularly for their Catamaran® SI Joint Fusion System, which is designed to treat sacroiliac (SI) joint disorders.

Two of the patents cover enhanced prostheses with drug delivery technology to improve bone growth, while the third patent focuses on improving revision procedures for failed SI joint implants.

My Take: While the new patents are a good news for Tenon, the stock hasn’t really had a stellar track record and the company’s financials are also quite weak. It might be best to keep this on your wait-and-watch list for now.

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Everything Else

  • 2.4 million Tesla vehicles’ FSD software are under an NHTSA probe due to crash reports.

  • South Korea wants to boost nighttime currency trading by removing the need for human oversight.

  • Swedish Sveafastigheter set its IPO price at 39.50 crowns, valuing the company at 7.9 billion Swedish crowns.

  • iPhone 16 gains traction in China but faces tough competition from local brands.

  • Gold surpassed US$2,700 as Middle East tensions drive haven demand.

  • Indonesia tackles the ore shortage as nickel demand remains weak.

  • New import restrictions in India aim to push laptop manufacturing domestically.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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