The U.S. stock market is poised for a slightly positive opening on Thursday, April 18th, 2024, as the earnings season kicks into high gear. The focus will be on Netflix subscriber growth, with the streaming giant being the first of the mega-tech stocks to report.
Netflix Subscriber: Can the Boom Continue?
After experiencing its strongest growth since the pandemic in the latter half of 2023, Netflix is now in the spotlight. The company’s subscriber numbers surged after it cracked down on password sharing globally, adding a whopping 22 million new users. However, analysts anticipate a slowdown, with estimates suggesting an addition of 5 million subscribers in the first quarter of 2024. This, while nearly triple the number from the same period last year, would still be a significant drop compared to the exceptional growth witnessed in the previous two quarters.
Beyond subscriber numbers, the market will also be keenly interested in the adoption rate of Netflix’s ad-supported tier, which currently boasts 23 million monthly subscribers. Additionally, content spending will be a key point of observation, with Netflix having announced plans to invest as much as $17 billion this year.
Other Market Movers
- TSMC Rides the AI Wave: Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, impressed with its first-quarter results. The company benefited from the booming artificial intelligence (AI) industry, posting a 9% rise in net profit and exceeding market expectations. This surge in AI demand helped TSMC counter the slowdown in pandemic-driven electronics demand, with first-quarter revenue rising 16.5% year-over-year.
- Tesla’s Bumpy Ride: Electric vehicle giant Tesla continues to face challenges. The company recently announced a workforce reduction of over 10%, coupled with a concerning 8.5% year-over-year decline in first-quarter deliveries. Despite these setbacks, Morgan Stanley remains optimistic about Tesla’s long-term prospects, particularly its potential as an AI player. However, the bank emphasizes the need for Tesla to stabilize its core electric vehicle business before fully embracing the AI narrative.
- Crude Prices Wobble Despite Venezuela Sanctions: Oil prices edged lower on Thursday, extending losses from the previous session. This comes even after the U.S. reimposed sanctions on Venezuelan crude exports due to President Maduro’s failure to hold promised elections. While the sanctions and ongoing geopolitical tensions in the Middle East provided some support, record-high U.S. production and a significant build in oil inventories weighed heavily on prices.
Conclusion
The upcoming Netflix earnings report will be a major indicator of the health of the streaming industry and the broader tech sector. With Netflix subscriber growth expected to slow down, investors will be looking for signs of continued user engagement and the success of Netflix’s new initiatives, such as the ad-supported tier and its content spending strategy. The performance of other key players like TSMC and Tesla will also shape market sentiment in the coming days.
