Netflix's Subscriber Data Change and Israel's Retaliatory Strike


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It's jaw-dropping to think how much money subscription-service companies leave on the table due to password sharing. Netflix was a case in point. The company has added more than 31 million subscribers over the past three quarters since it started its crackdown on freeloaders. But now Netflix doesn't want investors to pay attention to its subscriber data anymore. The company on Thursday announced that it would no longer report the data at all starting next year, a move that was partly to blame for a 9% slide in the company's shares on Friday. Netflix has been trying to get investors to focus less on subscriber growth for a while now—and not without some justification. Revenue growth has typically been more steady. It is also—according to Netflix—a better way to measure the performance of its business. Left unsaid is the idea that a streaming service with nearly 270 million paying members now may struggle to find the same number of untapped viewers in the future.

Overnight, Israel’s retaliatory strike on Iran roiled global markets, but the moves subsided as the limited scope of the assault became clear. Investors fear that a broader war could disrupt oil supplies, driving energy prices higher for companies and consumers around the world. The Nasdaq declined 2.1% and S&P 500 was down 0.9% on Friday. The Dow Jones Industrial Average managed to gain 0.6% as Dow-component American Express jumped after posting better-than-expected profits and an acceleration in card signups. Stock and bond prices have been under pressure for much of the week from signs that the Fed may hold off on rate cuts to quell inflation. That has hit tech shares particularly hard: The so-called Magnificent 7 stocks lost a combined $950 billion in market cap this week.

With many countries setting regulatory frameworks to permit the use of digital assets within their financial system, and consumers already having the option to use them for a variety of retail purchases outside of tapping a traditional bank account, credit card or cash, the velocity of blockchain, cryptocurrency and digital assets is speeding up.

Netflix’s life on top won’t always be an easy one. The streaming pioneer managed to deliver another quarter of blockbuster subscriber growth. Net new paid subscribers of 9.3 million in the first quarter were nearly double the official 4.8 million analysts expected, according to consensus estimates from Visible Alpha. They were even above the sky-high whisper number range that several analysts pegged as the real target among large investors tracking the company’s performance. Still, revenue of nearly $9.4 billion for the quarter only barely exceeded Wall Street’s forecast. Netflix also gave its first-ever annual revenue forecast—projecting growth of 13% to 15% for the year—that was only in line with analysts’ views.

America’s original Marlboro Man faces a fresh competitor, who also happens to be a Marlboro Man. The showdown between them will reshape the U.S. tobacco market. When Philip Morris International was spun out of Marlboro maker Altria, the two companies were never expected to compete head on. PMI’s job was to distribute America’s bestselling cigarette brand overseas, while Altria would continue to sell it at home. But PMI gate-crashed the U.S. market 16 months ago through its $16 billion takeover of Zyn oral nicotine-pouch maker Swedish Match. In roughly a week’s time, the last commercial tie between Altria and PMI will be severed. A 2013 contract that gave Altria the exclusive U.S. distribution rights to PMI’s most successful smoke-free product, IQOS heat-not-burn tobacco sticks, expires on April 30. After this date, PMI will be free to compete in the U.S. with its top noncigarette brand for the first time.

Banks have built up substantial reserves against office loans going bad.


Today's Markets News:

Corporate America Knows We’re Miserable. Is a Toilet Bomb the Answer?

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What's Coming Up:

SAP, Verizon, Visa, Tesla, Pepsico, Novartis, Philip Morris, Lockheed Martin, Meta, IBM, AT&T, Boeing, Microsoft, Alphabet, Merck, T-Mobile, Comcast, Intel, Exxon Mobil, Chevron and AbbVie are among companies reporting earnings next week. Economic reports expected include first-quarter GDP and initial jobless claims on Thursday.

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