The imminent end of the Covid era resulted in the worst first quarter in eight years for Netflix Inc., with the company missing its own forecast for new customers by millions of subscribers. The pain will extend to this quarter, as it predicts a gain of just 1 million new customers in the period compared with the 4.44 million projected by analysts.
The streaming giant got a boost from the pandemic as people stayed inside and watched movies and shows at home. Before reporting results, shares had been up 87% from their March 2020 low. The company has been warning for months now that growth was likely to slow, but the extent of the slowdown took the market by surprise. It’s also facing increased competition from services such as HBO Max and Disney+.
Shares slumped on the gloomier outlook, falling by as much as 8.4% in New York trading Wednesday.
What’s next? Disappointing results to start 2021 shouldn’t obscure upside in the second half as popular shows delayed due to Covid make their return, Bloomberg Intelligence analyst Geetha Ranganathan said. “Netflix’s plan to spend $17 billion on content in 2021, up 15% vs. 2019, may ease concerns about subscriber gains after Covid-19 created tough comparisons,” she said.
Since rising to over $64,000 on April 14, Bitcoin has fallen some 20% from its record high. The tumble began when Coinbase Global Inc., the largest U.S. digital currency exchange, closed 14% lower on the day of its trading debut, spurring a selloff in the larger currencies.
Dogecoin, on the other hand, had a dizzying 400% rally this week. The canine-themed digital token that was created as a joke surged to an all-time high of $0.42, bringing the total value of all coins in circulation to as much as $50 billion, bigger than the market cap of Ford Motor Co. It’s now well off those highs, though, having fallen 27% in the last 24 hours according to industry site Fintech Zoom.
The wild swings come as digital coins are gaining mainstream acceptance. Several companies, including Tesla Inc., have bought crypto assets this year. On Tuesday PayPal Holdings Inc. began allowing select Venmo users to to buy, sell, and hold tokens.
What’s next? Some see Bitcoin’s slump as a temporary speed bump. “Following some rest, we see Bitcoin reaching 10x last year’s level in 2021, with added help from U.S. exchange-traded funds,” Bloomberg Intelligence analyst Mike McGlone said. Dogecoin might not necessarily just be a joke either. “Gaining somewhat of a global cult following, we see little to stop DOGE from continuing to appreciate.”
Improving prospects for the global economy are lifting copper. The industrial metal closed at $9,445 on Wednesday, its highest settlement since August 2011, before retreating slightly.
Copper is also getting a tailwind from the drive to boost renewable energy production. Because of its conductive properties, copper is widely used in everything from solar panels to electric cars.
Earlier this month, Goldman Sachs Group analysts predicted the metal could reach $15,000 a ton by 2025 as the energy transition supports a surge in demand and supply remains relatively scarce.
What’s next? If the market’s bullish about the longer-term outlook, the short term could still be a little bumpy. Major miner Freeport-McMoRan Inc. raised its annual sales projections this week in a boost to supply. “Reflationary tailwinds are supporting higher base metals prices, but subsiding metals supply risk offers a divergent signal,” TD Securities analysts led by Bart Melek said in a note.
The fallout from the implosion of Archegos Capital Management is far from over for its lenders.
Credit Suisse Group AG said Thursday it will raise $2 billion from investors to shore up capital depleted by $5.5 billion in losses from the collapse of Archegos. It also suspended its share buyback and cut its dividend. Shares closed 2% down, taking this year’s losses to 19%. Lending at the hedge fund unit at the center of the debacle will also be slashed.
Meanwhile in Japan, the debacle has thwarted Nomura Holdings Inc.’s ambitions to join the global investment-banking elite. Nomura likely trails only Credit Suisse among banks posting the biggest losses from the family office collapse, leaving analysts concerned the bank is repeating past mistakes of taking on too much risk in a single market.
What’s next? There are still more questions to come for Credit Suisse, which is also battling the fallout from the Greensill Capital scandal. “Although capital has been mainly addressed, we still see questions remaining in terms of strategy and risk management,” JPMorgan Chase & Co. analysts wrote in a note to clients.
Stuck-at-home Chinese consumers don’t want to stop spending. Chinese high-end shoppers typically spend $111 billion a year on luxury goods, which pre-pandemic were mostly purchased from abroad.
Now the industry is scrambling to ensure they can spend that money at home. Alibaba’s logistics arm is launching direct cargo flights between Singapore and China’s Hainan Island, a subtropical island in the South China Sea where even domestic visitors can shop duty free.
Efforts to make it easier for China’s wealthy to spend at home also have the backing of the government. In July it tripled the annual limit for duty-free purchases made at home. Part of the hope is that even when the pandemic is over, mainlanders will spend more money domestically.
What’s next? “The Chinese government is sparing no effort” to bring back Chinese spending into China, said Amrita Banta, managing director at luxury consultancy Agility Research. “It pushes local duty free operators to up their game, encourages top foreign operators to enter the market and creates a legal framework which favors local consumption.”
— With assistance by Patrick Winters, Yvonne Yujing Liu, and Jinshan Hong