00:00And right now we are two minutes away from the end of the trading day.
00:03Romain Bostic here with Katie Greifeld, taking you through to that closing bell with the Global Simulcast.
00:08Carol Masser and Tim Senevic join us.
00:10Welcome to our audiences across all of our Bloomberg platforms, television, radio, our partnership with YouTube.
00:15As the stock market rallies, we should say the S&P up for the 11th time in the past 12
00:20sessions.
00:21But more importantly, Carol Masser and Tim, this is really an afternoon where all eyes are going to be on
00:26Netflix.
00:26Expect to get those earnings right after the bell.
00:28Earnings growth of 15 percent, revenue growth of 15 percent, operating margins of about 32 percent.
00:34That is the expectation.
00:36Yeah, you mentioned the S&P 500.
00:37I think the Nasdaq 100 now on track for its 12th straight gain.
00:41And I think you were checking that out.
00:42Tim, we haven't seen that in a long, long time.
00:45Yeah, I think going back to 2017.
00:47I'm going back to Netflix, though, because this will also be the, you know, a good view on price elasticity,
00:55Katie.
00:55They raised subscription prices in March.
00:57The standard plan without ads by $2 to $20 a month.
01:01Did people stay?
01:03Did they downgrade to less expensive plans with ads?
01:07Yeah.
01:07Did we get any commentary around that?
01:08Because we're not getting subscriber figures anymore.
01:10Well, it's interesting.
01:11I mean, at least the consensus of the guests on the close thus far has been that Netflix has the
01:16pricing power, that they raise prices and folks are generally OK paying that.
01:22And, of course, that all comes back to content and what they have on their slate there.
01:25Yeah, and as to John Belton, who we were speaking with over at Gabelle, pointed out here, he really wants
01:30to see how those price increases.
01:31And, of fact, not only top-line revenue, but more importantly, those operating margins.
01:35We should point out this is a stock that has sold off the day after earnings in each of the
01:40past three quarters.
01:41Expectation for today is an up-or-down implied one-day move of about 7 percent.
01:47Freeing across the screen here on this Thursday afternoon, the Dow Jones Industrial Average up about two-tenths of a
01:52percent.
01:52The S&P up about a quarter of a percent.
01:55I believe that is another record high there.
01:57Yes, it is, of course.
01:58The Nasdaq Composite up about four-tenths of a percent.
02:00And the Russell 2000 getting in on the action up about two-tenths of one percent.
02:04All right, quick check on the big caps, folks.
02:06S&P 500, about 300 names to the upside, Katie.
02:09202 to the downside, one unchanged.
02:12Here's what the circle says when it comes to the sector breakdown.
02:15Seven sectors finishing in the green.
02:17Energy, real estate, tech, some of your big gainers today.
02:20In terms of what didn't perform on this day, health care, industrials, consumer discretionary, and financials.
02:25But, overall, pretty decent breath here.
02:28All right, guys, I'm glued to my Bloomberg.
02:30In the meantime, quick check on an IPO today.
02:33Madison Air, ticker is MAIR.
02:35That went up more than 17 percent in today's session.
02:38On its first day of trading, a company raised $2.23 billion, the biggest U.S. listing of an industrial
02:45firm in close to three decades, selling 82.7 million shares.
02:50That value of the company.
02:52I'm just going to interrupt you right now here.
02:54We're seeing Netflix shares take a leg down as the earnings cross the wire here, the headline number.
02:59And we're going to actually start with the second quarter forecast.
03:02That's the current quarter that we're in.
03:03The company guiding below analyst estimates, 78 cents a share on the EPS side.
03:08That street was looking for about 84 cents.
03:10It's also guiding lower on operating margin, 32.6 percent.
03:14The street estimate, on average, was for 34.4 percent there as well.
03:19For the first quarter, the quarter that just passed, the company did actually beat on those metrics.
03:24EPS at $1.23.
03:25That's about double what it was a year before.
03:28Free cash flow coming in at about $5.1 billion.
03:31The street was looking for about $2.7 billion.
03:34And on the revenue side, $12.25 billion of revenue for the current quarter.
03:38The street, Katie, was looking for $12.17.
03:40So a beat for the first quarter, but it looks like guiding below street estimates for the second quarter.
03:45And that is certainly what's weighing on shares after hours right now, down about 7 percent.
03:50Of course, second quarter EPS, that forecast missing estimates.
03:53Getting another headline, too, that Netflix co-founder Reed Hastings will leave the board when term ends.
03:59So a little bit of an interesting tidbit there when it comes to the board.
04:03But, again, as we were just discussing with John Belton, this is a growth stock.
04:08This is an earnings growth story.
04:10And at least for right now, you can see that disappointment coming through, Tim.
04:13Maybe some investors in the past few months wondering how the company would grow without the addition of Warner Brothers
04:19Discovery.
04:19The company saying Warner Brothers would have been a nice accelerant for our strategy, but only at the right price.
04:25Repeating a refrain that it has said many times in the past.
04:28We have multiple ways to achieve our goals, including producing, licensing, and partnering.
04:32And we're constantly seeking to allocate our resources to the most attractive opportunities to maximize the value we are delivering
04:38to our members.
04:39The landscape we're operating in, they say, is more dynamic than ever.
04:43Can I just also point out, too, just another headline crossing the terminal.
04:45This is on the ad business.
04:46The company says it sees its 2026 advertising and revenue on track to reach $3 billion.
04:52And we had Geetha Raganathan over at Bloomberg Intelligence on the program earlier today.
04:56She's actually guiding, saying that this company can actually reach about $10 billion in ad revenue by 2030.
05:01So just in about four years, the company's saying they're going to get to $3 billion this year, Carol and
05:06Tim.
05:07Yeah, just to rehash, if you're just joining us again, shares of Netflix are down almost 9% here in
05:13the aftermarket.
05:13Second quarter EPS, 78 cents a share.
05:16That's a big miss.
05:17It was estimated to be 84 cents a share.
05:20And again, we've talked about Reed Hastings to leave the board when the term ends.
05:23He is, of course, one of the co-founders, still sees advertising, as Remain said, 2026 ad revenue on track
05:30to reach $3 billion.
05:31But again, investors not loving what they got here.
05:34Do you guys think – I want to go back to the Reed Hastings thing that Carol just mentioned.
05:37Yeah, thank you.
05:38Because I'm wondering if this is one of the reasons, too.
05:41We're seeing some pressure in the after hours.
05:43This guy was, you know, co-founder of the company.
05:46He's the one who pivoted.
05:48He brought DVDs by mail, pivoted with Quickster.
05:52Yeah.
05:52You know, it didn't work.
05:53I remember that.
05:53But everyone was like, it's not going to work.
05:54It worked.
05:55He invented this category.
05:57Yeah.
05:57Are they concerned that some of the innovation is leaving?
06:00I don't know.
06:01I mean, I don't know.
06:01He's kind of been on the sidelines for a while now.
06:03Yeah, he does.
06:03It's a ski mountain in Utah.
06:05He's doing philanthropy.
06:06If you talk to anybody, any investor about this company, whose name comes up all the time.
06:08It's Ted Sarandos.
06:09He's a content guy.
06:10Maybe Greg Peters.
06:13And obviously, having the presence of a founder on the board is important here.
06:17But I don't know.
06:18I feel like this company has already moved on and transitioned to it.
06:20And that's no disrespect to Reed Hastings and what he built.
06:22But I feel like they had already kind of moved on from that.
06:25All I can say is shares of Netflix have jumped more than 40 percent since late February when
06:29the company announced it would not raise its offer for Warner Brothers.
06:32So investors certainly weighed in.
06:33So we'll see what they have to say on the call with investors and analysts to see if we
06:38get some more color about what's to come.
06:40It's all about engagement, like keeping people going back because that's part of their ad
06:44model in a big way.
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