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Markets rallied off some early morning trepidation this Tuesday and raged ahead, making up for lost ground over the past few softer sessions. The Dow gained nearly 500 points on the day, +1.45%, while the Nasdaq put up +287 points, +2.15%. Splitting the difference, the S&P 500 grew by +1.61% on the day and the small-cap Russell 2000 rode up +2.04%. We’re now positive for the week, which would be a welcome change.
After beginning April in the green for the first couple sessions, we’re finally back to positive territory month to date. We still have a ways to go to get back to early January highs for the year (in the Dow and S&P’s case, those represented all-time highs), but perhaps a better-than-expected Q1 earnings season could hasten this positive shift.
If so, don’t look to Netflix (NFLX - Free Report) for assistance this quarter. Shares dumped -10% immediately upon its Q1 earnings report, which missed on the top line but beat on the bottom; however, it has now fallen -24% in the after-market. This compounds the -42% stock price year to date, indicating the streaming entertainment leader is now trading at an uncommonly low valuation.
Earnings of $3.53 per share easily surpassed the $2.92 expected in the Zacks consensus, although still below the $3.75 per share reported in the year-ago quarter. Revenues were light of expectations, however: $7.87 billion was moderately off the $7.94 billion expected, and still represents a year-over-year gain.
Netflix’s biggest problem was in net subscription adds, which came in negative overall for the first time ever: -200K, versus expectations of a gain of 2.5-2.75 million. Pulling its services out of Russia pushed the net adds into the negative; including anticipated subscriber adds in the country, Netflix assesses its subscriber add headline would have reached +500K. Still, this is roughly two million fewer than analysts had presumed.
In 13 of the past 15 quarters, Netflix shares have sold off on earnings releases. That’s not to say the stock has suffered overall through that time; in fact, as one of the great benefactors of the global pandemic, Netflix shares are still up +130% over the past five years. But those all-time highs the company registered in early November last year feel like a long time ago now.
IBM Corp. (IBM - Free Report) also put out fresh Q1 earnings figures, beating expectations on both top and bottom lines: $1.40 per share surpassed the $1.36 expected (though still below the $1.77 per share a year ago) on $14.20 billion in sales that easily took out the Zacks consensus $13.81 billion. Software growth was +12% and Consulting gained +13%, and progress in the company’s Cloud and Infrastructure business positions it well for the following quarters in 2022, especially the second half of the year. Shares are up +3% in the after market on the news.
Image: Bigstock
Netflix -24% on Weak Q1; IBM Beats Estimates
Markets rallied off some early morning trepidation this Tuesday and raged ahead, making up for lost ground over the past few softer sessions. The Dow gained nearly 500 points on the day, +1.45%, while the Nasdaq put up +287 points, +2.15%. Splitting the difference, the S&P 500 grew by +1.61% on the day and the small-cap Russell 2000 rode up +2.04%. We’re now positive for the week, which would be a welcome change.
After beginning April in the green for the first couple sessions, we’re finally back to positive territory month to date. We still have a ways to go to get back to early January highs for the year (in the Dow and S&P’s case, those represented all-time highs), but perhaps a better-than-expected Q1 earnings season could hasten this positive shift.
If so, don’t look to Netflix (NFLX - Free Report) for assistance this quarter. Shares dumped -10% immediately upon its Q1 earnings report, which missed on the top line but beat on the bottom; however, it has now fallen -24% in the after-market. This compounds the -42% stock price year to date, indicating the streaming entertainment leader is now trading at an uncommonly low valuation.
Earnings of $3.53 per share easily surpassed the $2.92 expected in the Zacks consensus, although still below the $3.75 per share reported in the year-ago quarter. Revenues were light of expectations, however: $7.87 billion was moderately off the $7.94 billion expected, and still represents a year-over-year gain.
Netflix’s biggest problem was in net subscription adds, which came in negative overall for the first time ever: -200K, versus expectations of a gain of 2.5-2.75 million. Pulling its services out of Russia pushed the net adds into the negative; including anticipated subscriber adds in the country, Netflix assesses its subscriber add headline would have reached +500K. Still, this is roughly two million fewer than analysts had presumed.
In 13 of the past 15 quarters, Netflix shares have sold off on earnings releases. That’s not to say the stock has suffered overall through that time; in fact, as one of the great benefactors of the global pandemic, Netflix shares are still up +130% over the past five years. But those all-time highs the company registered in early November last year feel like a long time ago now.
IBM Corp. (IBM - Free Report) also put out fresh Q1 earnings figures, beating expectations on both top and bottom lines: $1.40 per share surpassed the $1.36 expected (though still below the $1.77 per share a year ago) on $14.20 billion in sales that easily took out the Zacks consensus $13.81 billion. Software growth was +12% and Consulting gained +13%, and progress in the company’s Cloud and Infrastructure business positions it well for the following quarters in 2022, especially the second half of the year. Shares are up +3% in the after market on the news.
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