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Welcome back to the Rambling Mind Newsletter. This is your Market Update.
This week feels like the storm before the Earning Seasons Storm. Most news articles were too boring for me to care about.
Summary of Topics:
Company News
📺Netflix Adds 9 Million subscribers as it increases prices.
Stats of the Week
🤰🏾Black mothers are 2.6 times more likely to die during pregnancy
🛒0.7% increase in Retail Spending
🤑$56 Billion pay package for Elon Musk
💰$68 Million in change is thrown away every year
Looking Ahead
👩🏾💻Big Tech Earnings to Watch
Sports I Love
💔Man U barely survive from themselves
🏀NBA Playoffs Begin
Markets
Not a good week for stocks. Actually, the entire month of April has been pretty terrible. The S&P 500 is down 5% and seems to have more room to fall. As we enter earnings season, expect the market to be more chaotic and volatile. It might just present an opportunity to buy some great companies at wonderful prices like Netflix (more below).
Tale of the Tape
Economy
Companies
On Thursday, Netflix reported earnings and blew away all expectations that anyone had for the company. Proving that it is the only viable streaming option in the market.
🔢By The Numbers: The most important metric for Netflix has been subscriber growth and it showed no signs of slowing down.
It added 9 million new subscribers in Q1 2024. Far higher than the 4 million analysts expected.
It now has 269 million subscribers well above the estimated 264 million.
Revenues were $9.5 Billion for the quarter, an increase of 15% from last year.
Profit was $2.3 Billion an increase of 26% from last year.
📉Stock Move After Earnings: You would think investors would be excited by all the positive news. NOPE! The stock fell 5% and continued falling the day after.
👀What to Watch: Netflix said they would no longer provide subscriber numbers starting in 2025. Investors may believe this is a move that Netflix is making because they believe subscriber growth will slow down and don't want investors to have that insight. Others believe Netflix is doing this to move investors to the present with a focus on profitability rather than growth.
Netflix said in their shareholder letter, “As we’ve noted in previous letters, we’re focused on revenue and operating margin as our primary financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction. In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential.”
To me this sounds like Netflix is announcing the end of the Streaming War and that it is the Singular, Undisputed Champion. Now it wants to enjoy the spoils of war.
Stats of the Week
Black mothers are 2.6 times more likely to die during pregnancy due to complications than white mothers, according to the CDC. Last week was Black Maternal Health Week. A campaign that hopes to draw attention to the experiences of black mothers in the US health system.
Retail Sales increased 0.7% in March from February and 4% from 2023. Economists estimated an increase of 0.3%. Inflationary pressures did not deter consumers from swiping that card or tapping that phone.
🔢By The Numbers: 0.7% might seem small until you realize that 0.7% means an increase of $700 Billion.
Restaurants saw an increase in spending of 6.5% from last year and 0.4% from February.
Non-store retail aka online spending increased 11.3% from last year and 2.7% from February.
Takeaway: Never ever doubt the superpower of the United States. Our ability to spend even as we complain about everything is unmatched.
Elon Musk is asking Tesla shareholders to approve his new package that was shut down by a Delaware judge earlier this year. At the same time, Tesla announced that they are laying off 10% of the workforce.
Now I know the pay package is for past performance but my goodness this is just a bad look. You are asking for more money while you are firing people, your business is struggling, and the stock is collapsing.
Just another day in Corporate America. Also, shows that Elon has Tesla shareholders and the board by the balls.
According to Reworld, about $68 million in change is thrown away every year. I am shook because I am the guy who picks up pennies whenever I see one. I have a coin thing in my car and my house. It has to have at least $2 in there. Do you keep coins or throw them away?
Looking Ahead
Company/Earnings
We are entering a heavy earnings season. Some of your favorite Big Tech companies will be reporting earnings this week. AI remains the number 1 focus for investors.
👀 What to Watch
Facebook aka Meta reports earnings on Wednesday evening.
Microsoft reports on Thursday evening.
Google aka Alphabet also reports on Thursday.
Tesla reports earnings on Tuesday after announcing a 10% reduction in workforce last week, it will be interesting to hear answers to tough questions from investors about the direction of the company.
Other Companies Reporting
Sports I Love
💔This Team is SAD
This should have never been a close game. It should have never gone to penalties but with Man U, never say never. We will inevitably find a way to make the game harder than it needs to be. After 60 mins Man U was dominating. Then Man U forgot how to play football for the rest of the game.
This team is SAD.
🏀NBA Playoffs
Who you got? I got the Nuggets to repeat!
*I am a tiny shareholder in this company.