Weekly StockWatch: Netflix Q4 Results, Microsoft’s Bid for Activision, Deliveroo Growth & More

Netflix Q4 Results

The streaming giant delivered solid results on Thursday after the market closed, as its Revenue grew 16% y/y in Q4, to $7.709 billion, which was close to the firm's expectations. [1]

Netflix added 8.28 million new paid subscribers during the quarter, which is not a bad figure, as it marked a respectable 8.9% y/y growth, bringing the total users to 221.84 million.

However, its forward guidance on new subscriptions disappointed investors, as the firm projects the addition of merely 2.5 million paid users in Q1 2022, compared to roughly 4 million in the year ago quarter.

Netflix made a rare, albeit subtle acknowledgment of headwinds form increasing competition, commenting that "While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched".

Markets have reacted badly to the firm's subscriber projection for Q1 and the stock could be up for an ugly open today.

Trade the News: View our Economic Calendar

Microsoft to Buy Activision

The tech giant announced this week its plan to acquire gaming publisher and developer Activision Blizzard, for a whopping $68.7 billion price tag [2] – a move that is likely to draw regulatory scrutiny.

Activision is the maker of popular games console and PC games, such Call of Duty and Warcraft and the deal, would make Microsoft the world's third-largest gaming company by revenue, behind Tencent and Sony.

The acquisition would potentially transform the videogames industry, but Microsoft's aspirations extend to the metaverse. Its, CEO, Satya Nadella, commented that "Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms".

Ford Makes Money on Rivian

Ford seems to have the wind on its sales as we approach towards the quarterly financial results, which are due on Thursday February 3rd, after market close.

On Tuesday, it announced that it made a gain of $8.2 billion from its equity investment in electric track maker Rivian, following the latter's November 10 initial public offering. [3]

Rivian's R1T was named "Truck of the Year" by MotorTrend and will compete will Ford's highly anticipated all-electric F-150 Lightning. [4]

Furthermore, Ford collaborated with online payment processor Stripe, on five-year agreement to transform the automotive e-commerce and payments experience. Rollout of Stripe technology is expected to begin in the second half of 2022, starting in North America. [5]

Despite upbeat news around the company and last week's multi-year high, its stock is weighed by the broader risk-off mood this week, with losses of nearly 15% for F.us, before today's open.


Past Performance: Past Performance is not an indicator of future results.

EU Car Sales Slump

New car registrations in the European Union plunged 22.8% year-over-year in December, according to data released on Tuesday, by from the European Automobile Manufacturers' Association (ACEA).

This pushed stock of major automakers lower, in a bad week so far for European stock markets and the EUSTX50 losing more than 1% at the time of writing.

Deliveroo Trading Update

The London-based delivery firm provided strong trading update for the fourth quarter of 2021, as its Gross Transaction Value (GTV) grew 36% year-over, excluding Spain [6]. The firm pulled out from the country at the end of November as a response to changes in employment legislation.

The largest contributor was the UK and Ireland, probably helped by restrictive Plan B measures that were implemented by the UK government in December.

Deliveroo, had 80.8 million orders in Q4, marking a 42% year-over-year rise.

The firm's CEO, Will Shu, commented that "despite a challenging backdrop, we continued to strengthen our customer proposition, widen our customer base and execute against our strategy".

Unilever Bid for GlaxoSmithKlein

Unilever announced on Wednesday, that it would not increase its offer for GlaxoSmithKlein's Consumer Healthcare business, above £50bn [7].

GlaxoSmithKlein had announced late last week, that Unilever had made three bids to acquire the business and that it had turned them all down, because they "undervalued the Consumer Healthcare business and its future prospects". [8]

The Consumer Healthcare business is a Joint Venture between GSK and Pfizer, with GSK holding a majority controlling interest of 68% and Pfizer 32%.

GlaxoSmithKlein is UK-based company that focuses on Pharmaceuticals, Vaccines and Consumer Healthcare. GSK is expected to report its Q4 and Full Year financial results on Wednesday 9 February.

GSK.uk had surged to its highest level since May 2020 on Monday (1,741.76), reacting positively to the rejection of Unilever's proposals, but has given up initial gains.


Past Performance: Past Performance is not an indicator of future results.

Next Week (January 24-28)

The earnings season picks up, with tech heavyweights reporting next week, such as Microsoft, Intel and Apple. Tesla of course in another such high profile company, reporting on Wednesday, while results of airplane maker Boeing, are due on the same day.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 21 Jan 2022 https://s22.q4cdn.com/959853165/files/doc_financials/2021/q4/FINAL-Q4-21-Shareholder-Letter.pdf

2

Retrieved 21 Jan 2022 https://news.microsoft.com/2022/01/18/microsoft-to-acquire-activision-blizzard-to-bring-the-joy-and-community-of-gaming-to-everyone-across-every-device/

3

Retrieved 21 Jan 2022 https://s23.q4cdn.com/799033206/files/doc_news/2022/01/Press-Release_Special-Items_1.pdf

4

Retrieved 21 Jan 2022 https://www.motortrend.com/news/rivian-r1t-2022-truck-of-the-year/

5

Retrieved 21 Jan 2022 https://s23.q4cdn.com/799033206/files/doc_news/2022/01/Press-Release_Ford-Stripe-Agreement_1.pdf

6

Retrieved 21 Jan 2022 https://dpd-12774-s3.s3.eu-west-2.amazonaws.com/assets/6716/4262/9449/Deliveroo_2021_Q4_Trading_Update_RNS.pdf

7

Retrieved 21 Jan 2022 https://www.unilever.com/news/press-and-media/press-releases/2022/unilever-update-19-january-2022/

8

Retrieved 25 May 2022 https://www.gsk.com/en-gb/media/press-releases/update-gsk-consumer-healthcare/

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