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By Swissquote Analysts
Published on 21.01.2022
Morning news

Netflix Shares Sink as Company Sees Subscriber Growth Slowing

Topic of the day

Netflix Inc. said it expects to add a much smaller number of subscribers this quarter than it did a year ago as it adjusts to growing competition and lasting disruptions from the coronavirus pandemic, sending the video streamer’s shares down sharply. The company on Thursday forecast an increase of 2.5 million subscribers in the current quarter, compared with four million a year earlier. It also slightly missed its subscriber estimate for the fourth quarter, adding 8.3 million subscribers instead of the projected 8.5 million. Netflix stock fell 20% in after-hours trading, while shares of its main streaming rival, Walt Disney Co., were down 3.4%. Netflix’s subscriber miss came despite a strong content lineup of movies and TV shows in the quarter including new seasons of “The Witcher” and “You.” New movies that performed well included the political satire “Don’t Look Up,” which recently broke the company’s record for weekly viewership. Netflix’s revenue rose 16% to $7.71 billion in the quarter, in line with analysts’ projections. The company’s quarterly earnings were $607.4 million, or $1.33 a share, compared with a profit of $542.2 million, or $1.19 a share, a year earlier. Analysts were targeting 83 cents a share. The operating margin for the quarter was 8.2%, down from 14.4% a year earlier - a drop the company attributed to its expensive programming lineup for the previous three months. A large chunk of the new subscribers was in Europe, the Middle East and Africa, which added 3.5 million subscribers. In the U.S. and Canada, Netflix added 1.2 million, up slightly from the same period a year ago.

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Swiss stocks

The SMI gained 0.3 percent to 12,561 points on Thursday. Among the 20 SMI stocks, there were 13 price gainers and seven price losers. 28.02 (previously: 37.43) million shares were traded. While the Partners Group share (+1.6%) led the SMI table, SGS brought up the rear with a discount of 2.6%. Analysts at Credit Suisse had downgraded the shares of the goods testing group to "underperform" from "neutral" and lowered the price target. Credit Suisse papers (+0.7%) appeared unaffected by a fine in the US. According to traders, the sum of $ 9 million is too small to scare investors. Among small caps, Zur Rose climbed 5.3 percent. The fourth-quarter figures were in line with expectations, they said. Kuros Biosciences (+11.2%) and Idorsia (+4.6%) rose sharply following positive trial data and an approval in Japan, respectively. Bucher (+3%) benefited from a positive analyst comment. Good business figures boosted Comet (+3.5%).

International markets


European equity indices ended higher overall on Thursday, supported by the positive direction of Wall Street and the easing of bond yields, with questions about the extent of future monetary tightening by the Federal Reserve (Fed) taking a back seat. The Stoxx Europe 600 index gained 0.5% to 483.4 points. In Paris, the CAC 40 and the SBF 120 each gained 0.3%. In Frankfurt, the DAX 40 rose 0.7%, while the FTSE 100 in London fell 0.1%. In terms of indicators, consumer price inflation in the euro zone was confirmed at 5% year-on-year in December by Eurostat, the European statistics agency. Soitec fell 18.2% as the unexpected appointment of a new CEO created uncertainty for investors. The semiconductor materials maker announced Wednesday the appointment of Pierre Barnabé as chief executive officer, effective at the general meeting scheduled for July 2022. Alstom lost 1.1%. The rail equipment manufacturer reported Thursday order intake and sales overall in line with market expectations for the third quarter. Shares in French pharmaceutical company Valneva rose as much as 19.8% Thursday after the company reported its Covid-19 vaccine could neutralize the Omicron variant. Eramet (+1.1%) should publish "very good" results for 2021 and "those for 2022 should be even better", according to Oddo BHF, which raised its recommendation on the stock from "neutral" to "outperform" and its price target from 82 to 120 euros. Unilever (-0.8% in Amsterdam) announced on Wednesday that it would not raise its £50 billion (€60 billion) bid for GSK Consumer Healthcare. For Jefferies analysts, the probability that GlaxoSmithKline (-1.8% in London) will accept this proposal is low, but not zero. Associated British Foods' Omicron-reduced footfall late in the first quarter has hit Primark sales less than Jefferies had feared. Shares were down 4.2%. Shares in Deliveroo were up 1.4% after the company released a year-end trading update. Puma's expectation-beating revenue and earnings for 2021 are a boon for the sporting-goods market, especially in light of recent China demand concerns and supply issues, Piral Dadhania at RBC Capital Markets said. Puma rose 1.2%. LVMH is more than a proxy for the luxury-goods sector, Jefferies said ahead of the French conglomerate's 2021 results due next week, keeping a buy rating on the stock and upping the target price to EUR830.

United States

U.S. stocks fell on Thursday, as a late-afternoon selloff erased what had been an early rally, showing that investors are still concerned about the prospects of tightening monetary policy and slowing growth. The Nasdaq Composite Index dropped 186.23 points, or 1.3%, to 14154.02, a day after a tech selloff dragged down indexes. The index fell more than 3% from its intraday high to its low. It is now down nearly 12% from its November high. The Dow Jones Industrial Average lost 313.26 points, or 0.9%, to 34715.39. It was the index’s fifth consecutive down session, its longest such streak since September. The blue-chip index has fallen in nine of the past 11 sessions. The S&P 500 dropped 50.03 points, or 1.1%, to 4482.73. The day brought a spate of economics reports. Weekly jobless claims jumped to 286,000 from 231,000 as businesses contend with Omicron-related disruptions. Existing-home sales in December fell 7.1% from a year ago, though home sales for 2021 were at a 15-year high. Among U.S. equities, shares of Peloton Interactive fell 24% to $24.22 after CNBC reported the company is pausing production of its bikes and other connected-fitness products amid lower demand from consumers. Dow component Travelers Cos. rose 3.2% to $165.18 after reporting record net income for the fourth quarter. American Airlines Group fell 3.2% to $16.76 even after the carrier said it had trimmed its losses.


In Tokyo, the Nikkei index lost 1.3 percent. Toyota Motor fall by 2.8 percent. Denso loses 4.4 and Tokyo Electron 6.5 percent. In Hong Kong, the Hang Seng Index declines 0.9 percent. Netease give up 4.2 percent. Alibaba even lose 5.5 percent. In the battered real estate sector, Country Garden slides 5.2 percent after the company announced the issuance of convertible bonds to raise the equivalent of about $500 million. In South Korea, the Kospi loses 1.3 percent. Shares of index heavyweight Samsung Electronics are down 1.8 percent.


Investors are selling government bonds in anticipation of higher interest rates, pushing up yields, and in the process, pressuring tech companies, whose future earnings become less attractive when compared with bonds with rising yields. The yield on the 10-year U.S. Treasury note rose to 1.833%, adding to steady gains in recent weeks. Benchmark German bund yields fell further into negative territory, a day after they briefly turned positive. The yield on the 10-year German government bond slipped to minus 0.015% Thursday from minus 0.014% Wednesday.


Berenberg starts Evotec with Buy - Target 51 EUR
Goldman Sachs resumes RTL with Buy/target 62.80 - Trader
Hauck&Aufhäuser raises Hypoport target to EUR 270 (160) - Sell

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