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FIVE at FIVE AU: Netflix beats expectations; AFL fans turn on club sponsors such as Woodside

Published 19/10/2022, 04:45 pm
© Reuters.  FIVE at FIVE AU: Netflix beats expectations; AFL fans turn on club sponsors such as Woodside
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The ASX has had a second triumphant day in a row.

The S&P/ASX200 gained 24.60 points or 0.36% to 6,803.80 on lower-than-normal volume. Over the last five days, the index has gained 2.35% but is down 8.61% for the last year to date.

Earlier in the day, it hit an intraday high of 6,820.50, it’s highest level in more than a month.

The top-performing stocks were Core Lithium Ltd (ASX:CXO) up 8.24% and Pilbara Minerals up 6.35%.

While Core lifted on no news today, the market may be reacting to yesterday’s resignation of managing director Stephen Biggins a couple of days ago.

Pilbara, on the other hand, announced that it has accepted a pre-auction bid for a spodumene concentrate cargo ahead of its tenth scheduled digital auction on the Battery Material Exchange (BMX).

Nine of the 11 sectors were higher, with Industrials leading the way gaining 1.07%. Energy was the worst performer, falling 0.54%, while Information Technology was down 0.21%. Industrials up 0.95%, Consumer Discretionary up 0.88% and Utilities +1.00% were the other top performers.

Is Netflix (NASDAQ:NFLX) turning fortunes around?

Netflix has beaten estimates and added 2.41 million subscribers in Q3.

Josh Gilbert, market analyst at eToro, gives his take: "After what has been a torrid 2022 for Netflix so far, investors are breathing a sigh of relief as it seems they may be turning their fortunes around.

"After a decline in subscribers for the first time in its history, Netflix beat estimates and added 2.41 million subscribers in Q3.

"Content has once again been king and the reason Netflix has seen such a strong performance this quarter, from Stranger Things to Cobra Kai.

"Revenue jumped by 5.9% for the quarter to $7.93 billion, and earnings topped estimates at $3.10 a share. So, although Netflix isn’t growing at the same pace it was a few years ago, it's back on a positive trajectory.

"Although this was, all in all, a strong headline report, Q4 forecasts didn’t set the world alight, showing that it won’t all be rosy going forward.

"A strong dollar has continued to take a big chunk out of revenue and earnings, with Q4 earnings guidance for 0.36 cents per share compared to Wall Street's estimates of $1.20. But, the focal point that investors seem to care about was subscribers, which shows forecasts of 4.5 million net adds in Q4.

"The next focus for investors will be the company's new ad tier. Whilst the model may not have a significant impact until 2023, it seems that Netflix may have found the key to its next stage of growth."

Here’s another take from Eliot Hastie, markets analyst at Stake.

“The positive sentiment we saw before the results was likely driven by the bounce seen on the US market in recent days, plus Netflix announcing measures to draw customers and profit — including its ad-supported tier, and a crackdown on shared accounts.

“Since earnings showed an increase in subscriber numbers, there has been an almost 15% increase in the Netflix share price after hours. This is a positive sign, but it's important to remember that net income also declined from $1.44 billion last year, to $1.39 billion, and the company warned that revenue was likely to decline again next quarter due to economic pressures.

“Some commentators are asking whether these results, and the boost we’ve seen over the last few days, mean the worst of the tech downturn is behind us. But in reality, it is far too early to tell.

"ASX tech stocks had a strong day yesterday, but it remains to be seen whether this is simply a bear market rally. Given the popularity of lithium stocks on the ASX, Tesla’s earnings, which are due tomorrow, are likely to have a bigger impact on the local market.”

Footy fans have Woodside in their sights

Fremantle Dockers members have urged the club to pull its Woodside Energy Group sponsorship deal. A group of influential supporters are urging the club to disassociate with fossil fuel companies.

The group sent a letter to club president Dale Alcock suggesting ties be cut with what is one of Australia’s largest oil and gas companies.

Signatures on the letter included those of former WA premier Cameron Lawrence, author Tim Winton and climate crisis adviser Alex Hillman.

The Australian netball team has also had a similar request, while Australian cricket captain Pat Cummins (NYSE:CMI) has urged Cricket Australia to distance itself from major sponsor Alinta Energy.

“As members and supporters, we are speaking out because we don’t think it is fair for these young men and women to run out with a fossil fuel company’s logo plastered on their jumpers any longer,” the letter read.

“We should not allow our club’s good name to be used by a corporation to enhance its reputation when its core activities are so clearly threatening our planet.”

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