US stocks endured a difficult week with technology stocks and small caps particularly in the firing line amid disappointing news from the chip sector, escalating tensions in the Middle East and the pushing back of rate cut expectations.
Electric vehicle maker Telsa (TSLA) had a particularly tricky time of it as investors continue to react to news of job cuts, a big delivery miss earlier this month and a dispute over Elon Musk's pay.
Real estate investment trust Prologis (PLD:NYSE) slumped despite seemingly decent first quarter results as it lowered guidance.On the flipside, shares in health insurance and services firm UnitedHealth (UNH:NYSE) were in heavy demand as investors looked beyond the impact of a recent cyberattack on the company to concentrate on strong revenue growth.
NETFLIX
It’s seldom a good sign when companies start limiting the information they are willing to disclose, and Netflix (NFLX:NASDAQ) investors are right be to be wary of plans to stop reporting quarterly subscriber data beginning next year.
Subscriber additions are a closely watched signal of Netflix’s business health, and the company’s decision to stop giving out that number on a regular basis next year could be a sign that the streaming giant expects a growth slowdown soon.
That’s how investors appear to have taken the news, sending the stock plunging more than 6% in after-market trading following blowout first quarter subscriber growth.
Netflix added 9.33 million new users, markedly beating analyst expectations of about 4.8 million net adds, aided by its password sharing crackdown. Netflix reported earnings of $5.28 a share on revenue of $9.37 billion, topping estimates of $4.51 on revenue of $9.27 billion.
UNITED AIRLINES
It was a good week for United Airlines (UAL: NASDAQ) which led US travel stocks higher after results beat low expectations.
The shares gained nearly 20% at one point hitting the $50 mark, as the Chicago-headquartered airline said it plans to cut its 2024 fleet plan amid Boeing’s quality crises. United is also facing an FAA (Federal Aviation Administration) safety review, which has prevented some of its planned growth.
The US airline expects to receive just 61 new narrow-body planes this year, down from 101 it had anticipated at the beginning of the year and contracts for as many as 183 planes in 2024.
‘We’ve adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver,’ said CEO Scott Kirby.
The company forecasts earnings of between $3.75 to $4.25 per share in the second quarter, ahead of Wall Street estimates of approximately $3.76 per share.United also reiterated its full year earnings forecast of between $9 and $11 per share.
EQUIFAX
Shares in leading credit rating firm Equifax (EFX:NYSE) tumbled as much as 10% in intraday trading after the company’s second-quarter revenue guidance fell short of market estimates.
While first-quarter earnings of $1.50 per share topped forecasts, revenue of $1.39 billion was just shy of the consensus and the $1.41 billion to $1.43 billion of revenue predicted for the second quarter was also light.
In addition, the firm’s full-year guidance of $7.20 to $7.50 per share of earnings and $5.67 billion to $5.77 billion of revenue fell short of expectations.
The firm’s USIS (US Information Services) business saw a 19% drop in mortgage enquiries in the three months to March as hopes of an early interest rate cut evaporated and home buyers pulled in their horns.
While the first quarter marked an improvement on last year’s 34% drop in enquiries, the firm is still forecasting a double-digit decline for the whole of 2024 based on its current run-rate.
