Yahoo Finance Trending tickers: Netflix | Easyjet | Tesla | Babcock
The latest investor updates on stocks that are trending on Thursday
Netflix (NFLX)
Netflix shares have tumbled 7% in pre-market trading, almost giving up the entirety of its rally the last week, as its second quarter revenue fell short of forecasts.
The streaming platform added that guidance on revenue for this quarter was $8.52bn (£6.6bn), also short of expectations of $8.67bn.
However, the company said its subscriber growth reaccelerated as a result of the crackdown on password sharing, and as part of this shift it will be stopping its most basic plan offering to new and rejoining members in the UK. An ad supported plan will instead be taking its place.
“Netflix posted fairly robust Q2 numbers, though the stock had recently proved very strong so there is a little disappointment that they were not a huge beat,” Ben Barringer, equity research analyst at Quilter Cheviot, said.
“Netflix has not upped its prices this year which dampened revenue growth somewhat, but it continues to build scale and grow average revenue per user as more subscribers move to the ad supported tier providing a significant benefit from advertising uplift. Profitability was also much improved as Netflix’s content spend grew far slower than revenue growth.”
Easyjet (EZJ.L)
Easyjet saw its spring profits beat analysts’ expectations on Thursday as demand for foreign holidays boomed in the midst of the cost of living crisis.
The airline reported a pre-tax profit of £203m in the three months to June, £42m more than analysts had forecast, according to the consensus tracked by Bloomberg.
Revenue per seat, a key metric of profitability, rose by 23% year-on-year, with a forecast of a 10% annual increase over the following quarter. Ancillary revenues, which include the likes of customer payments for personally allocated seats, baggage and food, jumped 26%.
Winter bookings were up by more than 100% year-on-year and Easyjet said it had increased its planned capacity by 15% to meet the needs of strong winter demand.
Despite the positive update, shares slipped 3% in London on Thursday.
Read more: LIVE: FTSE climbs higher as Russia attack sends wheat prices soaring
“As ever, there are potential flies in the ointment, not least of which is the current sector challenges of constrained air space and Air Traffic Control disruptions. The resilience of the consumer had also been a concern given the parlous economic backdrop in the UK, but for the moment there are few signs of holidays being sacrificed come what may,” Richard Hunter, head of markets at Interactive Investor, said.
“EasyJet is clearly on a strong flight path, but the share price recovery still has far to go. Despite a hike of 26% over the last year, as compared to a decline of 0.4% for the wider FTSE250, the shares remain down by 24% over the last two years and by 60% from the levels leading into the pandemic, when the share price was nudging £13.
“This latest update should provide significant promise on more immediate prospects, with the market consensus of the shares as a strong hold quite likely to come under upward pressure.”
Tesla (TSLA)
Tesla is down 3% in pre-market trading after it reported that operating margins had dropped to 9.6% in the latest quarter, partially driven by increased spend on large products such as the Cybertruck and AI.
The car-maker also revealed that factory downtime would lead to lower production and that there could be further price reductions.
However, second quarter revenue came in at $24.9bn (£19.3bn), topping street estimates of $24.51, with adjusted EPS coming in at $0.91, compared to estimates of $0.81. That revenue figure represents a slight gain from Q1 and a gain of over 45% from a year ago.
Revenue from the core automotive business rose 46% year-on-year to $21.27bn, which was +6.5% sequentially.
On the profitability end, Tesla reported adjusted net income of $3.1 billion, compared to estimates of $2.87 billion and more than the $2.9 billion adjusted net income from Q1.
Read more: Musk Says Tesla to Spend Over $1 Billion on Dojo Supercomputer
But in terms of overall production Elon Musk, chief executive, said on the conference call that Q3 production would decrease slightly due to downtime stemming from factory upgrades. It stuck to its 1.8 million unit guidance and 50% annual unit growth.
“Tesla is a leader in a very uncertain automotive environment, which is going through a massive change so still represents a solid company,” Mamta Valechha, equity research analyst at Quilter Cheviot, said.
Babcock (BAB.L)
Babcock profits plunged on a dispute with the Ministry of Defence (MoD) but shares rose 10% on the day.
The firm reported a jump in annual revenues and said it had made “excellent” progress despite the profit slide.
Revenues for the year to 31 March rose 8% to £4.44bn, while the contract backlog rose 7% organically to £9.5bn.
But operating profits fell to £45.5m, from £226.8m a year previously, after the group was hit by a £100.1m loss on a Type 31 frigate contract. Losses per share were 6.9p, compared to earnings per share of 32.5p in 2022.
David Lockwood, chief executive, said the firm remained committed to reinstating the dividend.
“We’ve made excellent progress this year, with better-than-expected cash generation, margin expansion and double-digit revenue growth,” he said.
“In a world of significant instability, national security has never been more important. With defence making up two-thirds of the group, the combination of capability, availability and affordability we offer is increasingly relevant.”
Watch: What are SPACs?
Download the Yahoo Finance app, available for Apple and Android.
