Netflix stock soars after earnings boost from hit shows ‘Nobody Wants This’ and ‘Emily in Paris’
(NEW YORK) — Shares of Netflix climbed about 9% in early trading on Friday after a strong earnings report propelled by hit shows like “Nobody Wants This” and “The Perfect Couple.”
The company added about 5 million subscribers over a three-month period ending in September, which marked a roughly 40% decline from the same period one year prior.
Even so, the subscriber gains contributed to revenue totaling nearly $10 billion, in part due to the growth in popularity a subscription tier that includes advertisements, the earnings report on Thursday said. That sales figure marked 15% jump when compared with the same period one year prior.
In all, Netflix boasts about 282 million subscribers worldwide, making it the most popular streaming service by a wide margin. By comparison, Warner Bros. Discovery counts roughly 103 million subscribers across its services HBO, HBO Max and Discovery +, an earnings report in August showed.
“We’re feeling really good about the business,” Ted Sarandos, the company’s co-CEO, said on a conference call with Wall Street analysts.
Notable programs from the most recent quarter included the latest season of “Emily in Paris,” as well as movies like “Monster High 2” and “Rebel Ridge.” The company also expanded its live broadcasts, featuring a face-off between hot dog-eating rivals Takeru Kobayashi and Choey Chestnut in September.
On the earnings call, Netflix touted viewership of about two hours per user each day, which the company said indicated an increase so far this year when compared to last year.
The company expects continued growth next year due to a slate of programming that includes new seasons of top shows like “Wednesday” and “Squid Game,” as well as an additional installment in the “Knives Out” film series, Netflix said.
Netflix forecasted as much as $44 billion in revenue next year, which would amount to about a 13% increase over current performance.
Even after expanding its audience, Netflix still captures less than 10% of television viewership in the countries where the platform is most popular, Netflix said.
“There’s a huge opportunity to grow,” Gregory Peters, a co-CEO at Netflix, said on Thursday.
(NEW YORK) — Consumer prices rose 2.9% in July compared to a year ago, cooling slightly from the previous month and extending a monthslong slowdown of price increases. The fresh inflation reading outperformed economists’ expectations, reaching its lowest level since 2021.
Inflation has slowed for five consecutive months, reversing a surge in prices that took hold at the outset of this year. Price increases have cooled significantly from a peak of more than 9%, but inflation remains a percentage point higher than the Fed’s target rate of 2%.
The latest inflation data will further ease pressure on consumers saddled by a yearslong bout of elevated price increases. Despite the ongoing slowdown, consumer prices remain roughly 20% higher than where they stood three years ago.
Prices for some household staples are rising slower than overall inflation. Food prices increased 2.2% in July compared to a year ago, while energy prices inched upward 1.1%, U.S. Bureau of Labor Statistics data showed.
Prices for rice, flour and fish fell in July compared to a year ago. Prices for eggs, however, soared 19% over that period, data showed.
The latest inflation data arrived within days of a dramatic bout of market turmoil triggered in part by heightened pessimism about the chances of a “soft landing,” in which the U.S. averts a recession while inflation returns to normal levels.
The unrest on Wall Street followed a weaker-than-expected jobs report that indicated the economy may be slowing down more quickly than previously known.
Since last year, the Federal Reserve has held interest rates at their highest level in more than two decades. High borrowing costs for everything from mortgages to credit card loans have helped slow the economy and lower inflation, but the policy risks tipping the U.S. into a recession.
The chances of an interest rate cut at the Fed’s next meeting in September are all but certain, according to the CME FedWatch Tool, a measure of market sentiment. Market observers are split roughly down the middle about whether the Fed will impose its typical cut of a quarter of a percentage point or opt for a larger half-point cut.
The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, low interest rates help stimulate economic activity and boost employment; high interest rates slow economic performance and ease inflation.
A monthslong stretch of good news for inflation alongside bad news for unemployment has prompted the Fed to give additional consideration to its goal of keeping Americans on the job, Fed Chair Jerome Powell said last month.
“For a long time, since inflation arrived, it’s been right to mainly focus on inflation. But now that inflation has come down and the labor market has indeed cooled off, we’re going to be looking at both mandates. They’re in much better balance,” Powell said at a meeting of The Economic Club of Washington, D.C.
“That means that if we were to see an unexpected weakening in the labor market, then that might also be a reason for reaction by us,” Powell added.
The weak jobs report released earlier this month appeared to align with that hypothetical situation described by Powell.
Speaking at a press conference in Washington, D.C., in late July, before the jobs report, Powell said the central bank may reduce interest rate cuts in September, depending on economic performance.
“We’ve made no decisions about future meetings and that includes the September meeting,” Powell said. “We’re getting closer to the point at which we’ll reduce our policy rate, but we’re not quite at that point yet.”
(NEW YORK) — Inflation has loomed over the U.S. economy like a movie villain, haunting grocery store trips and gas runs. While costs remain much higher than they were a few years ago, those rapid price increases have mostly vanished.
Inflation stands at its lowest level in more than three years, hovering right near the Federal Reserve’s target rate of 2%, U.S. Bureau of Labor Statistics data this week showed.
Not long ago, a once-in-a-century pandemic upended the economy, sending millions nationwide into lockdown and snarling the global supply chain. Meanwhile, trillions of dollars in government support helped Americans spend amid the calamity.
A resulting imbalance between supply and demand sent prices soaring. The Russia-Ukraine war exacerbated the problem, causing gas and food shortages. Within a few years, the massive issue has largely been resolved.
“This was the highest inflation over the longest period that we’ve seen in decades. It was serious,” Claudia Sahm, chief economist at New Century Advisors and a former Fed official, told ABC News.
Here’s what to know about how inflation has come back down:
Repaired supply chain
During the pandemic, factories worldwide shut down. Workers stayed home for fear of getting sick. Freight ships waited off the coast of overwhelmed U.S. ports.
The pandemic clogged the global supply chain, imposing shortages for everything from cars to lumber to exercise equipment. Meanwhile, people stuck at home focused their spending on those exact sorts of products, since COVID-19 shutdowns prevented them from going out to eat or taking a vacation.
When too much money chased after too few products, prices climbed.
“The pandemic was the root of all evil in the economy,” Sahm said.
When lockdown rules were lifted, demand for goods slowed and manufacturers revved up production as workers returned. The nation’s ports loosened up the backlog of container ships, cutting freight prices dramatically and lowering costs for retailers.
Economists disagree over the role that elevated corporate profits played in driving inflation, as some say they account for more than half of the increase in prices while others say they have caused little or none of the hikes.
In some cases, the easing of supply chain blockages took months or even years to work their way through the global economy.
Take car prices, for example. When semiconductor production slowed nearly to a halt, carmakers lost out on a part necessary for production. Car prices skyrocketed, sending many consumers to the used car market. In turn, used car prices soared. So did costs for car repairs and, as a result, car insurance.
“Those have all now unwound,” William English, a professor of finance and former economist at the Federal Reserve, told ABC News.
Interest rate hikes
In response to rising inflation, the Fed embarked upon an aggressive series of interest rate hikes. Beginning in 2021, the Fed rapidly hiked interest rates, eventually putting borrowing costs at their highest level in more than two decades.
In contrast with the supply chain fixes, the interest rate hikes aimed to address the other side of the equation driving inflation: excess demand.
In March 2020, then-President Donald Trump signed into law a $2.2 trillion economic stimulus package, including direct payments of $1,200 and expanded unemployment insurance, among other measures. Months later, in December, Trump enacted a second $900 billion round of government support.
The following year, President Joe Biden signed a $1.9 trillion economic stimulus package of his own, including another round of $1,400 direct payments as well as an expansion of the child tax credit.
The government support helped buoy demand, even as the pandemic posed major challenges for the supply chain and decimated the service economy made up of sectors like restaurants and hotels.
“Now you have money, and nowhere to go and buy things,” said Hernan Moscoso Boedo, an economist at the University of Cincinnati.
By raising interest rates, the Fed made borrowing more expensive for consumers and businesses alike, making it difficult for them to take on loans for big purchases or large investments.
“Over the last few years, we’ve seen less money in the market because of the interest rates,” Boedo said, adding that the reduction of demand has helped ease prices.
Last month, the Fed reversed course, cutting interest rates by half a percentage point and dialing back the fight against inflation. While interest rates remain high relative to recent decades, the landmark shift suggests that the Fed considers the end of the inflation battle to be in sight.
(NEW YORK) — The Senate Permanent Subcommittee on Investigations published a memo Wednesday including new details about Boeing safety failings relating to the Alaska Airlines door plug incident in January.
The memo — released ahead of Federal Aviation Administration Administrator Michael Whitaker’s planned testimony before the subcommittee on Wednesday — suggested Boeing had failed to ensure adequate standards in multiple areas.
Boeing personnel, the memo said, “continue to feel pressure to prioritize speed of production over quality.”
The Jan. 5 Alaska Airlines incident saw a door plug on flight 1282 blow out minutes after takeoff from Portland, Oregon, leaving a large hole in the side of the Boeing 737 Max 9 plane. The plane safely made an emergency landing and no one was seriously injured.
The memo noted the results of a May 2024 employee survey that found only 47% of workers answered favorably to the statement, “Schedule pressures do not cause my team to lower our standards.”
Training also remains a problem, the memo said.
“Boeing is failing to ensure many of their employees have the appropriate education, training, skills or experience to effectively perform their assigned tasks,” it read.
The subcommittee said Boeing failed to ensure that nonconforming parts are appropriately documented, stored and dispositioned so that they are not installed on aircraft.
Quality inspection procedures — and FAA review of those procedures — also raised questions as to the qualifications and independence of inspectors, the memo said.
“Boeing personnel are allowed to inspect the quality of their own work,” it read.
“These troubling and recurring safety deficiencies raise questions about the FAA’s ability to oversee the quality and safety of Boeing aircraft through effective and lasting enforcement,” the memo said.
Wednesday’s memo and Whitaker’s testimony are part of a wider inquiry that began on March 19, investigating Boeing’s safety and culture practices following whistleblower allegations.