Netflix (
NFLX) went on a wild ride in after-hours trading on Tuesday,
sliding over 12% before ending the session near the flatline at $333/share. The stock is still holding steady in the premarket session this morning, following the streaming giant's set of
mixed results and initial scares over some of the company's guidance and growth momentum. Note that Netflix
no longer forecasts quarterly user figures after diversifying its business, but said it expects Q2 revenue of $8.2B, shy of consensus estimates for $8.47B.
Bigger picture: Netflix is looking for its next streaming act after
killing off its DVD-by-mail service that revolutionized movie rentals and eventually vaulted it into Hollywood. The next business plan is to
crack down on passwords (paid sharing), as well as new subscription plans that include advertising (ad-supported tiers), though it remains to be seen how things will play out. As for the strike recently authorized by Hollywood's writers union, Netflix announced its respect for the writers and WGA, but is confident that there's
enough in the pipe to soften the blow.
"We are growing, not as fast as we believe we can, not as fast as we would want to, but we are growing and we are profitable," co-CEO Ted Sarandos said on the
earnings call. "We have a clear path to reaccelerate growth in both revenue and profit and we are executing on it." Responding to the results, SA Investing Groups Leader
Quad 7 Capital said the "good and bad news"
has the market confused, while commenting on the recent earnings and outlook, margins and free cash flow.
Up next: The electric vehicle sector will be on high notice after today's closing bell with Tesla (
TSLA) due to report Q1 results. The key question for investors may be the update on
margin expectations amid the EV pricing war. Ahead of the big results, Tesla even
cut prices in the U.S. for sixth time this year, with the rear-wheel drive variant of the Model 3 now going for under $40,000 before incentives.
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