2023-07-20 06:36:41 ET
Summary
- Netflix shares fell 7% in premarket trading after Q2 earnings missed revenue expectations but beat profit and subscription forecasts.
- Tesla shares dropped over 3% premarket after the company failed to boost full-year deliveries guidance and highlighted margin pressures; CEO Elon Musk revealed early discussions with other automakers to license technology.
- Contract drug manufacturer Catalent saw shares rise nearly 8% premarket following reports that activist investor Elliott Management has taken a significant stake in the company and is pushing for board changes.
Listen below or on the go on Apple Podcasts and Spotify Netflix ( NFLX ) earnings call: Paid sharing key to ramping revenues in 2023. (00:28) Tesla ( TSLA ) investors size up margin crunch , deliveries update, FSD licensing . (01:43) Catalent ( CTLT ) gains after report of activist Elliott taking stake. (02:59)
This is an abridged transcript of the podcast.
Netflix (NASDAQ: NFLX ) is down 7% premarket after posting a second-quarter earnings report that missed slightly on revenues (and held below-consensus revenue guidance for Q3) but topped expectations on profit and subscriptions.
Revenues rose 2.7% falling a bit short of expectations for 4% growth. Operating income, though, jumped more than 22% and operating margin ticked up to 22.3%.
The streamer added a net 5.89M new subscriptions , beating analyst expectations for additions of just over 2M.
In terms of the crackdown on password sharing the company said "the business impacts of that product experience will roll in over several quarters, so it's not an overnight kind of thing.”
And that is “in part because some borrowers won't immediately sign up for their own account, but will do so next month or three months or six months or maybe even longer down the line."
In terms of free cash flow, the 2023 forecast came in even stronger, bumping to $5B from a previous $3.5B. But despite the significant increase in forecast for 2023, it might mean some "lumpiness" in 2024 free cash flow.
Tesla (NASDAQ: TSLA ) is down more than 3% premarket.
The company topped Q2 revenue and EPS marks , but did not boost full-year deliveries guidance and highlighted some drags on margins during the quarter.
Tesla ( TSLA ) said it is focusing on cost reduction, new product development that will enable future growth, investments in R&D, better vehicle financing options, continuous product improvement and generation of free cash flow.
During the earnings call, Elon Musk also said the EV giant is in early discussions with other automakers to license full self-driving software . This could provide a boost to the company's overall margins.
A one-time transfer of FSD will also be made available in Q3. Musk also referenced a slight decrease in Q3 production amid some factory upgrades.
CFRA analyst Garrett Nelson noted investor expectations were clearly high heading into the release. Nelson called TSLA's shrinking gross margins a primary concern.
He said U.S. EV fundamentals have become more dicey, with average U.S. EV transaction prices down 20% year-over-year in June.
Catalent (NYSE: CTLT ) is up nearly 8% premarket after a report that activist investor Elliott Investment Management has taken a significant stake in the company.
According to a WSJ report , which cited people familiar with the matter, Elliott is pushing for changes in the company's board and has been talking to potential director candidates about joining a slate of nominees for a proxy contest. The exact size of Elliott's stake wasn't known.
The report comes as shares of the contract drug manufacturer have plunged 55% over the past year as it dealt with issues ranging from the exit of the finance chief, financial warnings, delays in its quarterly earnings report, and issues with its manufacturing facilities.
Other headlines to look out for on Seeking Alpha:
IBM rises as Q2 revenue misses estimates, reaffirms full-year guidance
UPS, Teamsters will return to negotiating table next week as threat of strike looms
KKR expects a mild recession in 2024
American Airlines expected to follow peers with strong Q2 print
Taiwan Semiconductor GAAP EPADR of $1.14 beats by $0.06, revenue of $15.68B beats by $300M
On our catalyst watch for the day , Kenvue ( KVUE ) will hold its first earnings conference call since the spinoff from Johnson & Johnson ( JNJ ).
And ARK Invest will hold its Q2 Fund Webinar. Cathie Wood's fund recently took some profit on Coinbase ( COIN ) and purchased more Robinhood Markets ( HOOD ). Joby Aviation ( JOBY ) is one of ARK's holdings that has seen the biggest gain over the last few weeks.
The Nasdaq ( COMP.IND ) fluctuated through the end and finally eked out gains of 0.03%. The S&P 500 ( SP500 ) added 0.24%. Meanwhile, the Dow ( DJI ) advanced 0.31%.
Of the 11 S&P sectors, eight ended trading in the green, led by Real Estate and Utilities.
Treasury yields were mixed . The 10-year yield ( US10Y ) was down 3 basis points to 3.76%, while the 2-year yield ( US2Y ) was up 1 basis point to 4.76%.
Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is up 0.2%, the S&P 500 is down 0.04% and the Nasdaq is down 0.6%. Crude oil is up 0.3% at more than $75 a barrel. Bitcoin is up 1.2%.
In the world markets, the FTSE 100 is up 0.8% and the DAX is up 0.2%.
On today’s economic calendar, at 10am existing home sales.
For further details see:
Wall Street Breakfast Podcast: Netflix, Tesla Shares Dip Following Earnings