Netflix stocks are declining after hours after the company’s Revenue was slightly lower than expectations. The crackdown on password sharing and the new advertising tier have not yet had the desired effect. However, the company's earnings read higher than expectations. Tesla stocks also fell after market close after the latest earnings report confirmed the latest price cuts are affecting the company’s profitability. Netflix declined by more than 8% and Tesla by more than 4%, but have shareholders overreacted? According to analysts, earnings were not entirely negative; read below to find out why!
The stock market performance after the latest round of earnings was split into two halves. US indices rose to a new high but sharply declined in the second half of the US trading session. Indices rose on average by 0.63% before seeing a quick selloff. The best-performing index was the Dow Jones, while the worst was the NASDAQ. The SNP500 was the least volatile index. European markets also saw a mixed session and a solid decline this morning as the European session opened.
When looking at the currency market, the best-performing currency continues to be the Swiss Franc which was appreciating over the past week. Over the past 24 hours, the US Dollar has outperformed most currencies, including the Euro, Yen, and Pound. The worst-performing money was the Pound, which has declined by a further 0.60% since yesterday’s market analysis blog. Yesterday’s market analysis blog illustrates how low inflation data can pressure currencies in the medium to longer term.
NASDAQ - Tesla and Netflix Stocks Tumble
As mentioned above, the NASDAQ rose to a new high, bringing its performance this year so far to more than 45%. The price movement during this morning’s futures session shows signs of intraday strain. The downward price movement seen in the second half of the session was mainly triggered by a decline in stocks holding a higher “weight” due to disappointing earnings. However, it should be noted that the earnings reports were not 100% negative.
From the top 20 most influential stocks within the NASDAQ, only five ended the day higher. Tesla, NASDAQ and Advanced Micro Devices saw the most significant declines. The best-performing stock from the NASDAQ’s “top 20” was Cisco Systems which rose by 2.35%. Earnings reports will continue influencing shareholders throughout the day, with three companies releasing quarterly earnings reports. This morning Johnson&Johnson, Philip Morris and SAP will release their quarterly figures. J&J and Philip Morris are mainly connected to the SNP500 and Dow Jones. Johnson & Johnson is the 12th most influential stock for the SNP500, holding a “weight” of 1.08%, and Philip Morris is the 46th.
Even though the NASDAQ had risen to a new yearly high the day before, the latest two impulse waves are pointing downwards. Therefore, traders will concentrate on the support levels at $15,712 and $15,601. Further sell signals will materialise if the price declines below one of these levels. Trend indications on smaller time frames point toward a downward trend, but traders are cautious that the instrument is now at a previous support level. A bearish breakout is likely if today’s scheduled earnings release read lower than expectations.
Tesla and Netflix, which hold significant weight within the NASDAQ, saw substantial declines after their earnings report. Tesla came under pressure from the company’s profit margin, which declined to 18% due to the company deciding to cut the prices of most of its cars. The concern for investors is a significant erosion compared to 2021, when Tesla had a profit margin of almost 30%. However, the earnings data did have a positive side as well. The company’s market share continues growing and even outperforms local competitors; sales increased, and revenue beat expectations. Lastly, Tesla’s earnings per share read 10% more than expectations.
On the other hand, Netflix saw a more substantial decline after the company’s revenue read lower than expectations. However, again the earnings data does also have elements of potential. The earnings per share data came in 15% higher than analysts were expecting and the company added 5.9 million subscribers. The main concern for investors is that the company’s guidance for the third quarter’s revenue and earnings were lower than expectations.
Summary:
- The NASDAQ reaches a new high but cannot hold onto gains after investors negatively react to the latest earnings reports.
- Tesla came under pressure from the company’s profit margin, which declined from 30% to 18% over the past 18 months.
- Netflix’s revenue read lower than expectations but added more subscribers due to a crackdown on password sharing.
- The best-performing currency continues to be the Swiss Franc. However, over the past 24 hours, the US Dollar also has outperformed most currencies, including the Euro, Yen and Pound.
