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Zacks Investment Ideas feature highlights: Netflix and Tesla
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For Immediate Release
Chicago, IL – October 20, 2023 – Today, Zacks Investment Ideas feature highlights Netflix (NFLX - Free Report) and Tesla (TSLA - Free Report) .
Tesla & Netflix Earnings: A Closer Look
The quarterly cycle has picked up notable steam this week, with a flurry of quarterly reports scheduled to come. The big banks helped kick off the period positively, with investors optimistic that this momentum can continue.
After the bell yesterday, we heard from streaming titan Netflix and EV leader Tesla. Netflix shares saw buying pressure following the release, whereas Tesla shares faced adverse price action.
It raises a valid question – what was important within each respective release? Let’s take a closer look at each.
Netflix
Netflix reported quarterly EPS of $3.73, beating the Zacks Consensus EPS Estimate of $3.46 handily and improving 20% year-over-year. Quarterly revenue totaled $8.5 billion, improving 8% from the year-ago quarter and above the company’s previous forecast due to better-than-expected membership growth.
Paid Net Membership additions totaled 9 million, nicely above expectations and boosted by the adoption of the company’s new ad-supported plans. Impressively, ad-supported memberships grew nearly 70% quarter-over-quarter, indicating significant demand and momentum.
In addition, operating income grew 25% from the year-ago period, with the company’s operating margin also improving to 22.4%.
To top it off, Netflix provided solid guidance, raising its free cash flow outlook and announcing more price hikes for membership plans in the US, UK, and France. The company’s Basic plan will now cost $11.99, and Premium plans will be raised to $22.99.
Investors cheered on the news of price hikes and better-than-expected membership growth, with Netflix shares popping in the after-hours.
Tesla
Tesla reported quarterly EPS of $0.66, below the Zacks Consensus Estimate of $0.72 and reflecting a change of -37% from the year-ago period. Revenue also missed relative to our consensus expectation, totaling $23.4 billion but improving 9% on a year-over-year basis.
The EV leader revealed in early October that it produced over 430,000 vehicles and delivered roughly 435,000 throughout Q3, penciling in a decline from the prior quarter due to planned factory downtimes. Still, Tesla’s 2023 volume target of roughly 1.8 million vehicles remains in play.
Margins were also highly focused on, especially following the rapid price cuts we’ve seen the company deploy in 2023. Tesla’s gross margin totaled 17.9% in Q3, well below 25.1% in the same period last year and modestly beneath 18.2% in Q2. It’s critical to note that Tesla’s recent upgrades to new factories are expected to continue lowering costs – costs of goods sold (COGS) per vehicle decreased to $37,500 throughout the quarter.
We also got some further news surrounding the highly-awaited cybertruck, with deliveries still slated to begin later this year. Does anybody remember the window incident?
The market didn’t react positively to the results, with Tesla shares facing pressure following the release.
Bottom Line
Earnings season is always an exciting period for investors, with companies finally pulling the curtain back and unveiling what’s transpired behind closed doors.
And so far, we’ve gotten two big reports out of the way with many more looming on the horizon.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Netflix and Tesla
For Immediate Release
Chicago, IL – October 20, 2023 – Today, Zacks Investment Ideas feature highlights Netflix (NFLX - Free Report) and Tesla (TSLA - Free Report) .
Tesla & Netflix Earnings: A Closer Look
The quarterly cycle has picked up notable steam this week, with a flurry of quarterly reports scheduled to come. The big banks helped kick off the period positively, with investors optimistic that this momentum can continue.
After the bell yesterday, we heard from streaming titan Netflix and EV leader Tesla. Netflix shares saw buying pressure following the release, whereas Tesla shares faced adverse price action.
It raises a valid question – what was important within each respective release? Let’s take a closer look at each.
Netflix
Netflix reported quarterly EPS of $3.73, beating the Zacks Consensus EPS Estimate of $3.46 handily and improving 20% year-over-year. Quarterly revenue totaled $8.5 billion, improving 8% from the year-ago quarter and above the company’s previous forecast due to better-than-expected membership growth.
Paid Net Membership additions totaled 9 million, nicely above expectations and boosted by the adoption of the company’s new ad-supported plans. Impressively, ad-supported memberships grew nearly 70% quarter-over-quarter, indicating significant demand and momentum.
In addition, operating income grew 25% from the year-ago period, with the company’s operating margin also improving to 22.4%.
To top it off, Netflix provided solid guidance, raising its free cash flow outlook and announcing more price hikes for membership plans in the US, UK, and France. The company’s Basic plan will now cost $11.99, and Premium plans will be raised to $22.99.
Investors cheered on the news of price hikes and better-than-expected membership growth, with Netflix shares popping in the after-hours.
Tesla
Tesla reported quarterly EPS of $0.66, below the Zacks Consensus Estimate of $0.72 and reflecting a change of -37% from the year-ago period. Revenue also missed relative to our consensus expectation, totaling $23.4 billion but improving 9% on a year-over-year basis.
The EV leader revealed in early October that it produced over 430,000 vehicles and delivered roughly 435,000 throughout Q3, penciling in a decline from the prior quarter due to planned factory downtimes. Still, Tesla’s 2023 volume target of roughly 1.8 million vehicles remains in play.
Margins were also highly focused on, especially following the rapid price cuts we’ve seen the company deploy in 2023. Tesla’s gross margin totaled 17.9% in Q3, well below 25.1% in the same period last year and modestly beneath 18.2% in Q2. It’s critical to note that Tesla’s recent upgrades to new factories are expected to continue lowering costs – costs of goods sold (COGS) per vehicle decreased to $37,500 throughout the quarter.
We also got some further news surrounding the highly-awaited cybertruck, with deliveries still slated to begin later this year. Does anybody remember the window incident?
The market didn’t react positively to the results, with Tesla shares facing pressure following the release.
Bottom Line
Earnings season is always an exciting period for investors, with companies finally pulling the curtain back and unveiling what’s transpired behind closed doors.
And so far, we’ve gotten two big reports out of the way with many more looming on the horizon.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.