No more sharing for Netflix

Hey Superheroes,

We may have had the best first quarter in years, but it looks like the market may be taking a bit of a breather. The ASX 200 is currently at its lowest in two months and Wall Street is also in the red this week.

Just when it seemed that markets couldn’t get any more eventful, Wall Street’s earnings season finally kicked into high gear. 

Here are this week’s stories!

Netflix’s password-sharing crackdown is still working 

It’s been nearly a year since Netflix cracked down on password-sharing, but the streaming giant is still celebrating wins from it.

Netflix reported quarterly earnings overnight, boasting a tremendous 9.3 million new paid subscribers. 

That’s five times its subscriber growth in the same quarter last year, before Netflix started its crackdown. It almost doubled consensus analyst expectations of 5.5 million new subscribers.

📺 Leading the streaming wars

Perhaps unsurprisingly, Netflix also outperformed the numbers that analysts were expecting for Q1 2024.

• Revenue: $9.28B expected vs $9.37B actual (↑0.99%)
• Earnings per share: $4.54 vs $5.28 (↑16.2%)

Year-over-year, Netflix’s growth is especially noteworthy – revenue increased by 15% and EPS by 83%.

At the end of the first quarter, Netflix boasted almost 270 million subscribers.

Based on numbers from Digital Trends, this puts it substantially ahead of the subscriber numbers of its competition; Amazon Prime Video (~200m), Disney+ (~150m)  and Max (~98m).

🙅‍♂️ No more sharing

Despite its stellar earnings, Netflix’s stock is down almost 5% in the after-hours market. 

This follows its decision to stop sharing subscriber metrics (i.e. quarterly member numbers and average revenue per member) to the public from next year, with the big question being: why stop sharing those numbers unless Netflix expects them to fall?

Netflix substantiated its decision by stating that those numbers were indicators used for its future potential back in its early days – it believes that they’re no longer needed as Netflix now has profitability and cash flow metrics to show for its success.

First password-sharing and now information-sharing… perhaps Netflix just isn’t a fan of sharing?

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

• DRONE PARTNERSHIP: DroneShield (ASX:DRO) soared 25% this week (plus notched the title of #1 most traded ASX stock on Superhero) after signing a new three-year agreement with NATO. DroneShield will now be part of the NATO Support and Procurement Agency (NSPA) and anticipates a rise in future orders thanks to this.
• WOODSIDE LOSES STEAM: Woodside Energy, Australia’s top oil and gas exporter, saw revenues fall 31% year-on-year due to lower fossil fuel prices. Sales and production volumes also fell quarter-on-quarter. Its share price is down ~13% in the last year.
• META JOINS THE AI RACE: Meta just released early versions of Llama 3, its large language model, and an image generator that updates images based on prompts from users. The two features are set to integrate into Meta AI, the tech giant’s virtual assistant, as it gears up to rival ChatGPT.

That’s all for this week’s Spotlight!

Oh, we also introduced $2 trades! Learn more about our new brokerage fees.

Earnings season is ramping up on Wall Street with Tesla, Meta, Microsoft and Alphabet among those scheduled to report next week. 

We’ll be releasing an earnings calendar on Monday, so keep up to date by following us on Instagram, @superheroau! 

P.S. Don’t forget that next week is set to be a shorter week with the Anzac Day public holiday on Thursday.