The US stock market is in the middle of the third-quarter earnings season and it seems to be going well given that both the S&P 500 and the Dow Jones Industrial Average are trading at record-high values. Between October 16 and October 20, the S&P 500 appreciated by 0.86%, while the Dow Jones Index advanced by around 2%.
As more and more companies continue to file their quarterly reports, the trend of strong earnings is maintained. By October 20, 17% of the companies in the S&P 500 had filed their third-quarter results and 76% of them managed to beat the consensus earnings estimates and 72% posted better-than-expected revenue, according to FactSet. On average, companies managed to beat consensus earnings and revenue estimates by 0.6% and 1%, respectively. In year-on-year terms, companies registered an average earnings growth of 1.7%, led by Energy and Technology companies that posted the highest growth.
While earnings are the main factor that has been and will be driving the market in the next couple of weeks, there were other events that were not overlooked by investors during the last week. Particularly, there was a lot of optimism that the Congress will pass the proposed tax reform. On Thursday, Senate Republicans passed a $4.0 trillion budget resolution, which is one of the most important steps in clearing the way towards the tax reform.
Nevertheless, Financial Advisors are mostly keeping a close eye on companies that either have just reported their financial results or are about to do so, according to TrackStar, InvestingChannel’s official newsletter capturing and analyzing the trends of Financial Advisors. TrackStar data has revealed the 20 most searched tickers between October 15 and October 21. The top stock in the list was Netflix, Inc. (NASDAQ:NFLX), which has overtaken Apple Inc. (NASDAQ:AAPL) for the first time in weeks. However, Apple Inc. (NASDAQ:AAPL) was the second most-searched ticker, even though the company is not reporting its results in the upcoming months.
On the other hand, Visa Inc (NYSE:V), Amazon.com, Inc. (NASDAQ:AMZN), which ranked on the third and fifth spot, respectively, are scheduled to report their earnings this week, while Bank of America Corp (NYSE:BAC), which was the fourth most-searched ticker, has already done it.
With this in mind, let’s take a closer look at Netflix, Inc. (NASDAQ:NFLX), which was the most searched ticker among Financial Advisors last week. As stated earlier, the Los Gatos, California-based company posted its financial results on October 16, which included revenue of $2.99 billion, beating the consensus estimate of $2.97 billion by a narrow margin, but showing a 30% growth over the year. In addition, adjusted EPS of $0.37 was better than the expected $0.32.
However, while earnings and revenue are important figures in Netflix, Inc. (NASDAQ:NFLX)’s report, investors and analysts are more interested in the company’s subscribers numbers, which is a key metric determining the company’s performance. During the third quarter, Netflix’s net subscribers increase stood at 5.3 million, growing by 49% on the year and beating the Street Account estimate of 4.5 million. The net gain in subscribers included 850,000 subscribers in the US and 4.45 million internationally.
The subscriber growth puts Netflix total number of subscribers at 109.30 million, but the company will have to do more effort to keep attracting more viewers to its platform, as it faces much fiercer competition. Recently, many companies have started to enter the streaming space, with Amazon.com, Inc. (NASDAQ:AMZN) having launched its own platform and pouring money to release original content, while Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) have also announced plans to release original shows. In addition, media companies are also moving to launch their own platforms and pulling their content from Netflix. Earlier this year, Walt Disney Co (NYSE:DIS) said it would remove its movies from Netflix in 2019 and create its own platform.
Netflix, Inc. (NASDAQ:NFLX) is prepared to address more competition. The company, which decided to start developing original content in 2012 and scored big with hits like “Stranger Things”, “House of Cards”, “13 Reasons Why”, and “Narcos”, among others, said in its third-quarter report that it will spend between $7 billion and $8 billion next year. In the current quarter, viewers should expect new seasons of “Stranger Things”, which is scheduled to premiere on October 26, and “The Crown”, as well as a new movie “Bright” starring Will Smith will be released in December.
In addition to posting its third-quarter results, Netflix, Inc. (NASDAQ:NFLX) also provided its guidance for the fourth quarter, which include revenue of $3.27 billion and EPS of $0.41. The company also expects a net subscriber growth of 6.30 million.
However, despite strong results and good outlook, Netflix’s stock barely moved on the back of the results. The stock gained around 2% in after-hours trading on Monday after the results had been released, but it lost 1.5% on Tuesday, swinging briefly above $200, but giving up the gains in the following hours. Overall, the stock lost 2.67% during the last trading week. One of the reasons for a tepid reaction was the previous expectations that Netflix would report better-than-expected results, which drove the shares past the $200 mark for the first time in early hours of Friday. In addition, investors have been worried that Netflix’s recent subscription price rises will affect the subscriber numbers, while some analysts expressed concern that higher content spending could affect revenue growth.