Netflix’s lucky #8

Hey Superheroes,

It looks like both Big Tech and semiconductor stocks were hammered this week. The Nasdaq Composite recorded its worst day since 2022 this Wednesday, after it fell 2.80% in one day. 

Whether that’s because of political events or earnings season, it’s as always, another big week in the markets. 

Here are your stories.

Netflix’s lucky number eight

Netflix is having a good year so far. 

Its stock is up over 30%, its Netflix-exclusive series have been received well, and it appears that its strategic decisions have been very financially rewarding.

It even ended last quarter with a big bump – eight million new subscribers over the last three months. That averages out to 88,888 subscribers a day over 90 days!

📺 Strong year-on-year growth

Here’s how Netflix performed compared to analyst expectations:

• Revenue: $9.56B actual vs $9.53B expected (↑0.30%)
• EPS: $4.88 vs $4.76 (↑2.47%)
• Subscriber gain: 8.05 million vs 4.7 million (↑87.3%)

Revenue grew 16.8% year-on-year, supported by its price hikes, password sharing crackdown and Netflix’s new ad-tier subscription. Ad-tier memberships reached 40 million monthly active users – a 35 million increase compared to a year ago. 

Similarly, Netflix recorded a quarterly operating margin of 27.2% – an increase from 22.3% in Q2 2023. 

📊 Expecting better margins

Looking forward, Netflix expects full-year operating margins to potentially hit 26%. The streaming giant aims to continue growing margins by taking its ad tech platform in-house – which it’ll begin testing this year.

Netflix believes that while it’s grown over time, it’s still far off from what it hopes to attain. It now aims to grow its games offering (e.g. Netflix Stories) and advertising revenue from both consumers and partners.

Domino’s to close up to 100 stores worldwide

Akin to a domino effect, Domino’s has been reporting some unfortunate news after another.

Last year, Domino’s cut earnings guidance and dividend payout figures after a dive in profits. Last February, Domino’s reported its biggest drop in first-half net income since 2011. 

And this week, the pizza giant announced its decision to permanently cut out a piece of its pie.

🍕 Need more dough

Domino’s has made the decision to close down up to 100 stores globally. Under the jurisdiction of Australia’s Domino’s Pizza Enterprises (DMP.AU) are Japan and France, which will see about 80 and 20-30 gross store closures, respectively. 

For Domino’s, the closures and lower growth expectations mean that it will likely be unable to hit its target of 7,100 stores by 2033. It currently sits at about 3,700 stores.

Domino’s Australia is currently down 43% year-to-date, while Domino’s Pizza (DPZ.US) is flat over the same period.

🔦  Some other things we’re shining the Spotlight on:

• FORTESCUE AXES 700 JOBS: Fortescue Metals announced plans to cut 700 of its workforce as it scales back green energy ambitions. Fortescue’s CEO, Forrest, pointed out that the wars in Ukraine and the Middle East have increased global energy prices, making large-scale green hydrogen unviable at the moment.
• NOT STICKY ENOUGH: Accent Group shared its decision to close half of its Glue Store outlets in Australia after they failed to achieve the required returns. The group expects its Glue Store segment to become profitable by FY25. 
• GOLDMAN TAKES THE GOLD: Goldman Sachs beat both revenue and earnings estimates, even recording a 150% year-on-year increase in quarterly earnings. Its fixed income division outperformed with a 17% increase in revenue. 

Next week, we’ll be seeing Alphabet and Tesla among those releasing quarterly earnings.

Keep up to date on the markets by following us on Instagram, @superheroau!