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Today in the Market (7/19/2023)

Good Evening! On Wednesday, the trading day concluded with an increase in stock prices, as investors processed the initial earnings report from Goldman Sachs (GS) and anticipated the financial results from Netflix (NFLX) and Tesla (TSLA) after the bell.

The S&P 500 and the Dow Jones both saw gains of 0.24% and 0.31%. The Nasdaq Composite remained mostly unchanged with a slight increase of 0.03%.

NO PASSWORD SHARING IS WORKING!

Netflix (NFLX) released its Q2 financial results which displayed a combination of positive and negative outcomes. The company is currently focused on reducing expenses and enhancing user involvement in response to the growing competition within the streaming industry.

  • Revenue: $8.19 Billion vs. $8.30 Billion Expected
  • Subscribers: 5.89 Million net added vs. 2.1 Million Net added Expected
  • Earnings Per Share: $3.29 vs. $2.90 Expected

What happened to revenue? Despite the implementation of new initiatives such as the crackdown on password sharing and the introduction of the ad-supported tier, the revenue for the current period fell short of expectations.

Despite falling short of revenue expectations… Profitability metrics such as operating margin and free cash flow consistently exceeded projections. The operating margin for the quarter reached 22.3%, exceeding Netflix’s projection of 19%. The free cash flow exhibited a noteworthy performance of $1.34 billion, which greatly surpassed the anticipated value of $542 million as per consensus predictions.

Update on Password Sharing. Netflix has announced its intention to implement a paid sharing policy in the remaining countries that have not yet been subjected to password-sharing restrictions. According to the company’s statement, the revenue in each region has surpassed the pre-launch levels, accompanied by a higher number of sign-ups compared to cancellations.

FEELING HOT HOT HOT

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Southern Europe is currently experiencing a widespread heat wave, coinciding with Spain, Italy, and Greece meeting an unprecedented influx of international tourists who are eagerly embracing the newfound freedom from pandemic-related limitations. So how hot is it?

  • Rome experienced a high temperature of 104 F, while Madrid recorded a temperature of 102 F. On top of that, the forecast for Sunday in Athens indicates a temperature of 107 F.
  • Based on the analysis conducted by meteorologists, it is anticipated that the maximum temperatures experienced in Europe have the potential to surpass the previous record of 119.8 degrees recorded in Sicily two years ago.

The upside? According to the European Travel Commission, there has been a yearly decrease of 10% in European interest in Mediterranean travel during the period from June to November this year. This could have advantages for destinations situated in more northern regions, such as Denmark and Ireland, which have observed a notable surge in travel demand.

The downside… According to the World Travel & Tourism Council, Italy’s Environment Ministry anticipates that the rise in temperature will result in a negative impact on tourism, which is a significant setback for a nation that heavily relies on visitors for 10.2% of its GDP in the previous year.

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