Yesterday, US companies continued to release their earnings. In the trading session, the Nasdaq index declined by 35 points as investors waited for results from Netflix, which is one of the biggest technology company in the world.
The company released its report after the market closed. These results disappointed and the stock declined by more than 12% in the aftermarket hours. The company fell short of its own forecasts for new subscribers. In the second quarter, the company added more than 2.7 million subscribers, which was below its guidance for 5 million additions. Investors were expecting the company to add more than 5.3 million subscribers.
In addition, the company revealed that it had lost subscribers in the United States. This was the first time it had lost subscribers in the US since 2011. This decline came after the company raised its price for the US customers. This hike in price was necessary as the company continues to increase its spending on content. In total, the company lost more than 130k subscribers in the US. Still, the company has more than 60 million subscribers in the United States. In the statement, the company said that it expects the US growth to restart in the third quarter as the new seasons of Stranger Things and Orange is the New Black are expected to return.
The company’s disappointing quarter came as competition in the streaming industry is expected to increase. In the coming months, companies like Apple, AT&T, Disney, and Comcast are all scheduled to launch their own streaming products. These companies have started pulling out their most important shows from Netflix. Some of the most popular shows in Netflix are from these companies. Investors are also concerned about the company’s debt, which has ballooned to more than $12.6 billion. Its free cash flow burn has increased to more than $3 billion this year.
Meanwhile, IBM released its results which showed that revenues declined for the fourth straight quarter. This happened as the company saw increased pressure from older products like consulting and systems. The company has been positioning itself in the emerging fields like cloud computing, artificial intelligence, and blockchain. The company suffered 22 straight quarters of contraction before coming back to a short-lived growth in 2017. While the numbers were not good, investors cheered the company’s slight improvement in the gross profit margins of the global technologies services.
These results provide a preview of what investors can expect in the next few weeks when technology companies like Google, Apple, and Microsoft release their earnings. As this happens, the Nasdaq index will be watched closely because it is the biggest technology-related index in the world. The index has been declining as shown below.