Gloomy Netflix forecast erases much of stock's pandemic gains

LOS ANGELES - Netflix Inc dashed hopes for a quick rebound after forecasting weak first-quarter subscriber growth on Thursday, sending shares sinking nearly 20 percent and wiping away most of its remaining pandemic-fueled gains from 2020.

The world's largest streaming service projected it would add 2.5 million customers from January through March, less than half of the 5.9 million analysts had forecast, according to Refinitiv IBES data.

Netflix tempered its growth expectations, citing the late arrival of anticipated content, such as the second season of "Bridgerton," and the film "The Adam Project."

Shares of Netflix plummeted nearly 20 percent to $408.13 in after-hours trading. Competitor Walt Disney Co, which has staked its future on building a strong streaming business, saw its shares sink 4%. Streaming device Roku Inc fell 5 percent.

Netflix added 8.3 million customers from October to December, when it released a heavy lineup of new programming including the star-studded movies "Red Notice" and "Don't Look Up" and a new season of "The Witcher." Industry analysts had projected 8.4 million.

The company's global subscriber total at the end of 2021 reached 221.8 million.

In a letter to shareholders, Netflix said it believed the ongoing COVID-19 pandemic and economic hardships in several parts of the world like Latin America may have kept subscriber growth from rebounding to levels seen before the pandemic.

The company posted adjusted earnings per share of $1.33, crushing analyst consensus estimates of 82 cents. Revenue hit $7.71 billion, in line with estimates.

Netflix last week raised prices in its biggest market, the United States and Canada, where analysts say growth is stagnating, and is now looking for growth overseas.

The company rode a roller coaster during the pandemic, with steep growth early in 2020 when people were staying home and movie theaters were closed, followed by a slowdown in 2021. Netflix picked up more than 36 million customers in 2020, and 18.2 million in 2021.

Netflix's subscriber growth in 2022 had been expected to stabilize and return to the pace logged before the pandemic, when it added 27.9 million subscribers in 2019, analysts say. The company's upcoming slate includes new installments of "Ozark" and "Stranger Things" and a three-part Kanye West documentary.

But competitors including Disney and AT&T Inc's HBO Max, are pouring billions into creating new programming to grab a share of the streaming market.

Netflix said added competition "may be affecting our marginal growth some," but added that it was still growing in every country where new streaming options have launched.

"Even in a world of uncertainty and increasing competition, we’re optimistic about our long-term growth prospects as streaming supplants linear entertainment around the world," Netflix said in its shareholder letter.

The company is looking for new ways to attract customers including with mobile video games. The company said it released 10 games in 2021, was pleased with the early reception and would expand its gaming portfolio in 2022.

-reuters

Japan Q1 GDP shrinks 1.3 percent, hit by virus restrictions

TOKYO - Japan's economy contracted 1.3 percent in the three months to March after the government reimposed virus restrictions in major cities as infections surged, data showed Tuesday.

The quarter-on-quarter fall came after the world's third-largest economy grew for two quarters to December, but the expansion was stopped in its tracks by a winter increase in coronavirus cases.

The government imposed new virus states of emergency in January in response, urging people to stay at home and calling for restaurants to close earlier.

The measures slowed consumption, hitting growth despite the relative strength of the manufacturing sector.

The 1.3 percent contraction was largely in line with economist expectations.

"Personal consumption has been particularly hard hit by the Covid-19 emergency measures," Naoya Oshikubo, senior economist at SuMi TRUST, said in an analysis issued before the release of the official data.

"On a positive note, private capital investment is expected to continue to pick up as the manufacturing industry as a whole remains strong," Oshikubo said.

Economists warn that the slowdown is likely to continue, with the government forced to impose a third state of emergency in several parts of the country -- including economic engines Tokyo and Osaka -- earlier this month.

The emergency measures are tougher than in the past, and have been extended to the end of May and expanded to several other regions in recent days.

Further complicating the growth picture is Japan's comparatively slow vaccine rollout, said Marcel Thieliant, senior Japan economist at Capital Economics.

"With the medical situation still worsening and the vaccine rollout too slow, it will take until the end of the year for output to return to pre-virus levels," he said in a note.

Agence France-Presse

Stocks move higher on Wall Street, following gains overseas

Stocks headed higher in midday trading on Wall Street Tuesday, adding to the market’s gains from a day earlier, as investors focused on the prospects for an economic recovery as more businesses reopen after being shut down due to the coronavirus pandemic.

The S&P 500 was up 1% and on pace for its third straight monthly gain. The rally follows solid gains in Europe, where indexes marched higher after some encouraging economic data. Bond yields rose slightly, another sign that investors were regaining confidence in the economy.

Technology sector stocks, which led the way higher as the market rebounded the past three months from a 34% plunge, helped power the latest gains. Banks, health care stocks and companies that rely on consumer spending were among the big gainers. Real estate and utilities stocks fell.


Encouraging economic data, including retail sales and hiring, have helped stoke optimism among investors that the reopening of businesses in the U.S. and other countries will pull the economy out of its recession relatively quickly. The market has continued to climb, despite bouts of volatility, even as a rise in new coronvairus cases in the U.S. and other countries clouds the prospects for an economic recovery.

Investors have grown confident that the Federal Reserve and Congress are prepared to continue providing a historic amount of support to the market and economy, said Sam Stovall, chief investment strategist at CFRA.

“All of the negative news has basically been built into share prices,” Stovall said. “If we are to stumble, then the Fed and Congress are likely to step in to put a fiscal and monetary floor underneath the economy and the markets. And now, with the likelihood that the economy will not be shutting down entirely should we end up with a second wave, the market is basically saying it’s ‘onward and upward.’”

The Dow Jones Industrial Average was up 230 points, or 0.9%, to 26,259. The Nasdaq composite, which is heavily weighted with technology stocks, gained 1.4%. The index has only fallen twice so far in June. Small company stocks were also notching solid gains. The Russell 2000 index was up 0.7%.

The yield on the 10-year Treasury note rose to 0.72% from 0.70% late Monday. It tends to move with investors’ expectations for the economy and inflation.

The World Health Organization said over the weekend that the pandemic is still in its ascendancy. The U.S., which is seeing rapid increases in cases across the South and West, has the most infections and deaths by far in the world, with 2.3 million cases and over 120,000 confirmed virus-related deaths, according to a tally by Johns Hopkins University.

Still, investors have been placing more weight on economic data releases that suggest economies that have reopened are making strides to emerge from a deep recession.

On Tuesday, the Commerce Department said sales of new U.S. homes jumped 16.6% in May to an annual rate of 676,000, exceeding Wall Street’s forecasts. Several homebuilders rose. Century Communities was up 1.8%.

Further updates on the U.S. economy are expected toward the end of this week, when the government will issue data on consumer spending, weekly unemployment aid applications and durable goods orders.

European shares advanced after a measure of economic activity in the eurozone, the purchasing managers’ index, rose significantly in June from the month before. The index was just shy of the level that indicates the economy is growing again after a devastating plunge in the spring.

France’s CAC 40 gained 1.4%, while Germany’s DAX rallied 2.1%. Britain’s FTSE 100 rose 1.2%.

Asian markets overcame some early turbulence caused by reported comments by White House trade adviser Peter Navarro suggesting the U.S. trade deal with China was in trouble. President Donald Trump later said the agreement was still on.

Benchmark U.S. crude oil was up 0.1% to $40.77 a barrel. Brent crude, the international standard, was up 0.5% to $43.28 per barrel.

The Associated Press

Dow sinks 1,500 as virus cases rise, deflating optimism

Stocks are falling sharply on Wall Street as coronavirus cases increase again, deflating recent optimism that economy could recover quickly as lockdowns ease. The Dow fell more than 1,500 points and the S&P 500 was on track for its worst day in nearly three months. Many market watchers have been saying that a scorching comeback in the market since late March was overdone and didn’t reflect the dire state of the economy. A day earlier, the Federal Reserve said the road back to recovery would be long. Bond yields fell sharply, a sign of increasing caution among investors.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:


Stocks are down sharply on Wall Street Thursday, pulling the Dow Jones Industrial Average more than 1,500 points lower and placing the S&P 500 on track for its worst day in nearly three months.

The S&P 500 was down 4.7% in afternoon trading, extending its losses into a third straight day. The benchmark index is now on track for its first weekly drop in four weeks.

The selling, which gained momentum as the day went on, comes as recent optimism that the reopening of businesses would drive a relatively quick economic recovery fades amid rising coronavirus cases in many U.S. states and countries.

The pullback marks a reversal for the market, which rallied 44.5% between late March and Monday, a scorching rate that many skeptics said was unsustainable and didn’t reflect the dire condition of the economy. Only a day ago the Nasdaq closed above the 10,000-point mark for the first time.

The Federal Reserve dimmed some of the optimism investors have had about a swift economic rebound Wednesday, warning that the road to recovery from the worst downturn in decades would be long. The central bank also said it doesn’t foresee a rate hike through 2022.

That, coupled with the recent run-up in stock prices, set the stage for the wave of selling Thursday, said Sal Bruno, chief investment officer at IndexIQ.

“It’s not surprising to see a bit of a sell-off, given the furious rally we’ve had coming out of the lows, despite the fact that the economy was not doing great,” Bruno said. “The fact that (the Fed) is talking about keeping interest rates this low through 2022 is a little eye-opening for a lot of folks.”

The Dow was down 1,512 points, or 5.6%, to 25,477. The Nasdaq composite, which was coming off an all-time high, slid 4%. Small company stocks continued to bear the brunt of the selling. The Russell 2000 index was down 5.9%. European and Asian markets also fell.


Nearly all of the companies in the S&P 500 were down. Technology, financial, industrial and health care stocks accounted for much of the market’s broad slide. Energy stocks were the biggest losers as crude oil prices fell sharply. Bond yields fell and the price of gold surged as worried investors shifted money into the traditional safe-haven assets.

Delta Air Lines, Boeing and MGM Resorts International were among the biggest decliners in the S&P 500. Each was down more than 11%.

Emergency rescue efforts by the Fed and Congress helped arrest the market’s staggering 34% skid in February and March. Since then, the market had been riding a wave of investor optimism that the economy will bounce back by the end of the year, if not sooner, as businesses reopen and people go back to work. But confidence in that scenario is waning as infections and fatalities continue to climb in the U.S. and elsewhere.

In the U.S., Texas and Florida were among the states reporting jumps in the number of coronavirus cases after precautions were relaxed last month. The total number of U.S. cases has now surpassed 2 million.

Still, investors are waiting for more data to see whether the spike in COVID-19 cases are a sign of a possible second wave of the infection, said Charlie Ripley, senior investment strategist for Allianz Investment Management.

He’s focusing on updates to job numbers and consumer spending to gauge how well the economy is recovering.

“We think the recovery is largely underway, but there is still some considerable uncertainty on the path we have ahead,” Ripley said. “If we see some more follow-on of people coming back to work and consumer sentiment picking up, that will be a positive sign for a faster recovery.”

Anxious investors shifted more money into government bonds Thursday, sending yields broadly lower. The yield on the 10-year Treasury yield slid to 0.67% from 0.74% late Wednesday, a big move. Last Friday it briefly moved above 0.90%.

Gold for August delivery climbed 1.2% to $1,740.60 an ounce.

Oil prices fell sharply. Benchmark U.S. crude oil for July delivery was down 8.4% at $36.26 a barrel. Brent crude oil for August delivery was off 7.8% at $38.48 a barrel.

Markets in Europe were broadly lower. France’s CAC 40 slid 4.7% and Germany’s DAX dropped 4.5%. Britain’s FTSE 100 fell 4%. Stock markets in Asia closed lower.

The Labor Department said Thursday that about 1.5 million people applied for U.S. unemployment benefits last week, another sign that many Americans are still losing their jobs even as the economy begins to gradually reopen. The latest figure marked the 10th straight weekly decline in applications for jobless aid since they peaked in mid-March when the coronavirus hit hard. Still, the pace of layoffs remains historically high.

Other jobs data have been more encouraging. A report on Friday showed that the U.S. job market surprisingly strengthened last month as employers added 2.5 million workers to their payrolls. Economists had been expecting them instead to slash another 8 million jobs.

That report helped stoke optimism among investors that the economy can climb out of its current hole faster than forecast. But the Fed estimated Wednesday that the economy will shrink 6.5% this year, in line with other forecasts, before expanding 5% in 2021. It also expects the unemployment rate at 9.3%, near the peak of the last recession, by the end of this year. The rate is now 13.3%.

The central bank said it would keep providing support to the economy by buying bonds to maintain low borrowing rates and forecast no rate hike through 2022, which could make it easier for consumers and businesses to borrow and spend enough to sustain an economy depressed by business shutdowns and high unemployment.

The Associated Press 

Market may trade sideways this week

MANILA, Philippines — The stock market this week may be characterised by follow through buying on Chinese New Year ahead of the release of the January inflation numbers, according to First Metro Investment Corp. vice president Cristina Ulang.

Ulang said investors would closely monitor the corporate earnings report, noting that outperformance versus estimates would hold the key to sustained foreign buying.

Christopher Mangun, head of Eagle Equities, said that there may be lower trading volumes this week.


“This week is the first trading week of February and with only four days of trading we are going to see lower trading volumes as the holiday is in the middle of week and investors may take a break from trading and take the week off,” he said

Thus, he said the market may continue to trade sideways between 8,000 and 8,200.

“The index may end the week lower, but the key is for it to stay above the 8,000 level. If we continue to see heavy foreign inflows, then the market may sustain its current momentum. Local investors have started taking some risk off the table and currently foreign money is supporting the market. With earnings reports set to start coming in this week on top of better inflation numbers for January, we may see the market factor this is and maintain its current trajectory,” he said.

Last week, the market was pulled up by rosy western equities markets which rose after dovish comments from the US Fed.

The main index ended the week 90.96 points higher or 1.13 percent to close at 8,144.16.

In the first three days of trading, there was a pullback, even touching the 7,900 support level.

However, in the last two trading days there was already  a complete reversal, eventually breaking above 8,100 in the afternoon trading session on Friday, Mangun said.

Foreign money flooded the market with net foreign buying at P5.74 billion.

In all, the PSEi ends the month of January 7.3 percent higher which is the market’s best performance since March 2016.

source: philstar.com

Twitter, social media are fertile ground for stock hoaxes

NEW YORK — Prominent short-seller David Einhorn raised eyebrows last month when he popped up on Twitter to disavow that he had tweeted about Herbalife Ltd.

“Apparently I have a twitter impersonator,” said the hedge fund manager, adding that he had no plans “to tweet about stocks.”

What set off Einhorn, founder of Greenlight Capital, was a post by a since-suspended Twitter account called @Greenlightcap that read: “The $HLF tug of war will in the end come down to who has more money to play with. I wouldn’t want to be in Bill’s shoes right now #TeamIcahn.”

That may have misled people into thinking that Einhorn – whose infrequent tweets under @davidein tend to be about poker – was picking sides in the battle between two other big-name investors, Carl Icahn and Bill Ackman, who have opposing positions in Herbalife.

Einhorn isn’t the only shortseller who has been impersonated on Twitter, which has become an important source of information for many investors. In late January, shares of Audience Inc and Sarepta Therapeutics Inc plunged following tweets that were purported to be from short-selling researchers.

“Twitter pump and dump schemes are obviously something for the market to be concerned about, even if they are just a new way for people to do schemes that have been done forever,” said Keith McCullough, chief executive officer at Hedgeye Risk Management in New Haven, Connecticut. He uses Twitter and has more than 22,000 followers.

In such hoaxes, anonymous users set up accounts with names that sound like prominent market players, issue negative commentary, and spark massive declines. The selling that follows shows how the rapid spread of information on social media can make for volatile trading, and is a warning to investors who trade on news before fully verifying the source.

The FBI monitors Facebook and Twitter, and told Reuters in November that social media will be a big part of securities fraud. The U.S. Securities and Exchange Commission’s website has a warning that swindlers can use social media “to appear legitimate, to hide behind anonymity, and to reach many people at low cost.” And the Financial Industry Regulatory Authority has issued social media guidelines to broker-dealers, requiring that they keep records of usage.

In January 2012, the SEC charged an advisor with attempting to sell fictitious securities through LinkedIn Corp, an online social network catering to professionals.

“As some violators have learned the hard way, using social media to defraud investors leaves an electronic trail of footprints for our investigators to follow,” said John Nester, a spokesman for the SEC in Washington, D.C.

Looking for information

Investors can minimize the risk of being conned by only trusting the Twitter accounts of established users and independently researching any tip or rumor.

In addition to Twitter, another popular site for traders is Stocktwits.com, where users send messages almost exclusively about stocks. These sites in some ways are more sophisticated versions of on-line chat rooms that were popular during the dot-com boom. Rumors in those rooms flowed freely, and became a breeding ground for untrustworthy information.

Twitter and StockTwits have stronger filters – the Einhorn impersonator’s account was suspended shortly after the misleading post – but the spigot of false information cannot be shut entirely.

StockTwits doesn’t allow discussions of penny stocks “since those are the ones that are the most vulnerable to being pushed around,” said Howard Lindzon, the company’s San Diego-based chief executive.

Twitter, which did not respond to requests for comment, verifies the accounts of public figures, focusing on “highly sought users in music, acting, fashion, government, politics, religion, journalism, media, advertising, business, and other key interest areas,” according to its website.

Analytic firms are also emerging to help traders navigate social media.

The activity in audio chip maker Audience, which has a market value of $275 million, serves as a prime example of the peril of following sources that are not what they seem – and is also where social media scanners see an opportunity.

The initial fake tweet was posted at 8:44 a.m. New York time on January 29, by someone pretending to be short-seller Carson Block of Muddy Waters. Block is best known for exposing accounting problems and taking short positions in a series of Chinese companies listed in the United States.

The share declines did not accelerate until after 2 p.m., when trading picked up, and more than 300,000 shares traded in a two-minute period, far exceeding the stock’s daily average volume of about 186,000 shares.

Dataminr, a New York-based social media analytics firm that monitors Twitter for stock activity, said it sent an alert on the fake tweet at 12:28 p.m. The firm “was able to warn its clients of a market rumor far in advance of the market-movement, along with providing context on the veracity of the message,” said Dataminr Chief Executive Ted Bailey.

While Dataminr declined to provide the actual language of the alert, it said the alert conveyed skepticism about the tweet on Audience, noting the account’s past activity and its “demonstrated domain expertise across the social graph.”

Overall, analytic firms said scanning programs were not advanced enough to be fully automated yet.

“We’re a strong believer in the human element in this,” said Emmett Kilduff, CEO of Dublin-based Eagle Intel, a social media analytics firm that has alerts evaluated by a research team composed of former portfolio managers and analysts.

Another analytics firm, London-based Knowsis, filters its alerts through market professionals. CEO Oli Freeling-Wilkinson said the firm looks at who is sending information, taking into account the person’s location, whether they are an established market professional, and how shares react.

No system is fail proof, and big share reactions will still likely occur from time to time, goosed initially by Twitter but later as investors react to price moves. It is this aspect that will keep people on their toes.

“There’s an impulse, when you see a name of yours moving like this, to shoot first and ask questions later and find out why it is moving,” said Sam Ginzburg, head of trading at First New York in New York.

source: interaksyon.com