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- BetterHelp | January 24rd, 2024
BetterHelp | January 24rd, 2024
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[ good morning ]
Here’s everything you need to know today
With real inflation data printing today—treasury yields are retreating enough to let major indexes push even further into all-time highs.
The NASDAQ is leading the charge today on the back of a transformational earnings report from Netflix, while other tech names are suggesting the semiconductor business is well and truly booming.
At the same time, the New Hampshire presidential primary in the U.S. has essentially confirmed that we’re set for a messy Biden v. Trump rematch for 2024. Sure, a lot can happen in the ~10 months we have until election day—but if the only thing we have to worry about is election outcomes, the path is pretty clear. While the media landscape is set to be noisy for that rematch—the market knows what it’ll get from either side winning and therefore our political landscape isn’t going to add much to market volatility this year.
Across the Pacific—China is adding to the good vibes by pushing even more stimulus efforts. After months of half-measures, the CCP has finally decided it’s not going to slide into deflation without a fight. Will it be enough to maintain the foundation of global trade?
For now—it’s tech season in the earnings market. Let’s examine the major reports and trends that are going to dominate this quarter and beyond.
Markets at a Glance
*Market data based on standard trading hours and calculated close to close
[ streaming ]
Netflix Erupts on Massive Subscriber Growth
Turns out, not that many people are going to resort to piracy
BREAKING NEWS
After the strong year Netflix had—the OG streaming company had a lot to prove in their most recent earnings report. To the market’s amazement, Netflix stepped up to the plate and smashed every expectation. Their stock is pushing double-digit growth in early trading. Let’s break it down:
WHAT HAPPENED
The main news is subscriber growth. Netflix nearly doubled the number of subscribers they added to the platform year-over-year. Netflix hit 13.1 million new customers—which is a level of growth only beaten by the initial stages of the COVID pandemic in early 2020. The password crackdown is working, and it turns out people are sticking around.
IMPERFECT EARNINGS
This subscriber beat helped Netflix smash revenue expectations—driving $8.8 billion in revenue for the quarter. However, since Netflix is relying on more international growth to continue scaling, they’re finally running into a little foreign exchange pressure thanks to the strength of the U.S. Dollar. This pushed Netflix’s EPS down to $2.11, which just barely missed internal expectations of $2.15. The Street was expecting a big beat here—but the miss is not weighing on Netflix’s valuation.
WHY IT MATTERS
Netflix has established themselves as the irrefutable winner of the writer’s and actor’s strikes of 2023. They saved a ton of costs and grew their subscriber numbers on the back of cheaper reality shows and a massive back catalog of content. Now, they’re using that strength to break into live events with their WWE Raw deal. This is just the beginning as Netflix fully establishes their dominance in the streaming business. The market loves this show of strength and Netflix stock gained around 10% in early trading.
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Sectors at a Glance
| Sector | Day | Month | Year |
|---|---|---|---|
| Communications | 0.99% | 4.13% | 41.32% |
| Consumer Disc. | -0.24% | -3.44% | 23.49% |
| Consumer Stap. | 1.09% | 1.98% | -0.48% |
| Energy | 0.21% | -5.90% | -10.70% |
| Financials | 0.16% | 2.14% | 6.92% |
| Health Care | -0.07% | 3.75% | 4.69% |
| Industrials | -0.08% | 0.01% | 13.79% |
| Materials | 0.33% | -3.47% | 0.18% |
| Real Estate | -0.54% | -2.79% | -1.60% |
| Technology | 0.40% | 5.04% | 51.13% |
| Utilities | 0.18% | -2.78% | -12.32% |
*Market data based on standard trading hours and calculated close to close
[ semiconductors ]
ASML Surges as Semiconductor Demand Jumps
Revenue jumped 30%—but will demand stay this strong?
BREAKING NEWS
ASML—a critical link in the chipmaking supply chain—reported a massive jump in revenue for their earnings this morning. Let’s break down what it means for the AI boom:
WHAT HAPPENED
The Dutch equipment firm generated a $5.66 EPS from $7.66 billion in revenue for Q4, blowing past market expectations. The Street anticipated that lower demand at the end of 2023 would keep chip manufacturing muted. Instead, ASML’s full-year revenue jumped 30% as demand ripped upward early.
HOLDING PATTERN
For clarity, ASML manufactures machines that etch semiconductors. They’re the first stage of advanced chip demand. So, this Q4 jump makes sense with companies boosting their capacity throughout 2024. However, ASML management anticipates that this trend won’t continue accelerating. Instead, 2024 will be relatively flat compared to this growth as major firms gear up for much higher demand in 2025.
WHY IT MATTERS
In the short term, results like this are providing a lot of lift for tech stocks as it appears there’s a lot more semiconductor demand right now than we anticipated. For the medium term though—given ASML is the first real link in the advanced AI chip supply chain—it looks like growth could potentially hit a wall if ASML’s conservative guidance holds for the first few quarters of 2024. That’s something The Street will watch closely across the next few months. But for now, we’ll take the big tech euphoria as ASML stock is surging over 5% as the markets open.
[ communications ]
AT&T Slumps Despite Subscriber Growth
Business revenue is quickly eroding
BREAKING NEWS
AT&T is getting hammered by investors after a very mixed earnings call. Let’s explore the damage:
WHAT HAPPENED
AT&T has been in the wilderness for the past year, and it really shows in these earnings figures. The telecom giant missed expectations by only generating a $0.54 EPS from $32 billion in revenue. In short, earnings fell hard while revenue stayed flat. Why is AT&T stuck in this holding pattern?
EFFICIENCY COMES FOR US ALL
AT&T managed to add a lot of new subscribers—hitting 526,000 postpaid phone net adds for the quarter. That beat The Street’s expectations for 487K new subscribers—but that only translated to 3.9% revenue growth.
At the same time, business sales dropped over 10% as more and more companies opted out of landline contracts. As the wider business world cuts every cost possible—AT&T’s old reliable revenue base is quickly eroding away.
WHY IT MATTERS
The Communications business is getting tougher and more crowded every day—and AT&T’s shortfall here is a great illustration of how priorities are shifting in this market. Landline usage was basically a no-brainer in the past, but more and more companies are opting for more efficient uses of their limited operating budget. This result adds to a tough year where expenses and slow growth really weighed on AT&T. The stock fell over 2% in early trading and is now down over 10% on the year.
Extra Moby Snacks
Boeing stock stayed flat today after another Boeing plane experienced mechanical issues. The nosewheel of a 757 jet fell off before it took off in Atlanta. When it rains, it pours I guess.
DuPont stock dropped over 10% after the company revealed their preliminary projections for Q4 earnings. Profitability looks like it will miss the mark this year as Q1 2024 guidance came back very weak. Basically, the Chinese economy isn’t recovering fast enough to maintain demand levels for the materials giant.
TOGETHER WITH
Today’s report is brought to you by BetterHelp. Tap into the world's largest network of licensed, accredited, and experienced therapists who can help you with a range of issues including depression, anxiety, relationships, trauma, grief, and more.