Morning Reads

Morning Reads

Todays Open Interest Change




Netflix (NFLX) went on a wild ride in after-hours trading on Tuesday, sliding over 12% before ending the session near the flatline at $333/share. The stock is still holding steady in the premarket session this morning, following the streaming giant's set of mixed results and initial scares over some of the company's guidance and growth momentum. Note that Netflix no longer forecasts quarterly user figures after diversifying its business, but said it expects Q2 revenue of $8.2B, shy of consensus estimates for $8.47B.

Bigger picture: Netflix is looking for its next streaming act after killing off its DVD-by-mail service that revolutionized movie rentals and eventually vaulted it into Hollywood. The next business plan is to crack down on passwords (paid sharing), as well as new subscription plans that include advertising (ad-supported tiers), though it remains to be seen how things will play out. As for the strike recently authorized by Hollywood's writers union, Netflix announced its respect for the writers and WGA, but is confident that there's enough in the pipe to soften the blow.

"We are growing, not as fast as we believe we can, not as fast as we would want to, but we are growing and we are profitable," co-CEO Ted Sarandos said on the earnings call. "We have a clear path to reaccelerate growth in both revenue and profit and we are executing on it." Responding to the results, SA Investing Groups Leader Quad 7 Capital said the "good and bad news" has the market confused, while commenting on the recent earnings and outlook, margins and free cash flow.

Up next: The electric vehicle sector will be on high notice after today's closing bell with Tesla (TSLA) due to report Q1 results. The key question for investors may be the update on margin expectations amid the EV pricing war. Ahead of the big results, Tesla even cut prices in the U.S. for sixth time this year, with the rear-wheel drive variant of the Model 3 now going for under $40,000 before incentives.

Moving on

It came a bit late, but Fox News (FOX) has agreed to pay $787.5M to settle a defamation lawsuit from Dominion Voting Systems centering around the network's claims about a rigged presidential election in 2020. The settlement, which represents "accountability" and a "ringing endorsement of truth and democracy," according to Dominion attorneys, marks just about the halfway point in the company's push for $1.6B in damages. Now the focus turns to Smartmatic, another voting machine company that is similarly suing Fox News for $2.7B in damages. "Ouch. $787.5M is 52% of Fox's net income TTM," wrote user Orangejulius, while The Real Cavalier was quick to explain why it's "not material to the stock price." Join the discussion here. (319 comments)

Is cash still king?

Federal Reserve Governor Michelle Bowman said yesterday that a wholesale central bank digital currency could be promising for future settlement of some financial market transactions and processing international payments. The remarks echoed prior-day comments from across the pond, with Bank of England Deputy Governor Sir Jon Cunliffe citing a need to create a so-called digital pound. While the U.S. has not yet created a CBDC - a central bank-issued digital currency representing a nation's fiat currency - both the Biden administration and the Federal Reserve have been assessing the potential risks and benefits since last year. Here's an in-depth take on what CBDCs are and how they are different from cryptocurrencies.

(Not) ready for takeoff

Southwest Airlines (NYSE:LUV) requested the FAA pause the airline’s departures on Tuesday, according to the regulator, due to "intermittent technology issues." Data from FlightAware showed the lack of a quick fix threw flight delays into thousands by mid-morning, accounting for over one-third of scheduled departures. Southwest has been under significant scrutiny since operational failings led to widespread flight cancellations and meltdown over the Christmas holiday period. The company estimated the system failures cost the airline $800M in a January earnings report. (31 comments)

Today's Markets

In Asia, Japan -0.2%. Hong Kong -1.4%. China -0.7%. India -0.3%.
In Europe, at midday, London -0.4%. Paris -0.1%. Frankfurt -0.2%.
Futures at 6:30, Dow -0.5%. S&P -0.6%. Nasdaq -0.9%. Crude -1.7% to $79.49. Gold -1.7% to $1985.10. Bitcoin -2.5% to $29,171.
Ten-year Treasury Yield +6 bps to 3.63%

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
1:00 PM Results of $12B, 20-Year Bond Auction
2:00 PM Fed's Beige Book
7:00 PM Fed's Williams Speech

Companies reporting earnings today »

What else is happening...

McDonald's (MCD) is changing the recipe for its most iconic burgers.

Meta (META) eyes another round of job cuts, Disney (DISdoes too.

Beating estimates: BofA (BAC) gains as Q1 NII, trading revenue jump.

Judge to decide whether to halt J&J (JNJ) talc lawsuits tomorrow.

U.K. inflation rate surprises again, remains in double digits.

China said to substantially reduce fine and charges on Ant Group.

Google (GOOGL) reportedly launching its foldable phone in June.

Lockheed Martin (LMT) rises to record after Q1 results beat estimates.

Report: Lululemon (LULU) weighs sale of fitness business Mirror.

United (UAL) posts lighter than expected loss, projects profits ahead.

Boeing (BA) sticks with output goals for 737 despite supplier issues.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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