Finimize - 🫣 Netflix's plot twist

What’s going on here?

Netflix reported its quarterly results on Wednesday – and while they weren’t completely awful, the overall update was something of a tear-jerker.

What does this mean?

Netflix has been playing the bad cop recently, cracking down on account sharing in a bid to boost users – and that strategy seems to be working. After all, data showed a surge in new US subscribers after Netflix started warning about the clampdown. That helps explain why the firm added 5.9 million new subscribers last quarter – more than double what analysts predicted. But there’s a snag: revenue still fell short of expectations, partly due to price cuts in some markets and unfavorable foreign exchange rates. And while the firm unveiled plans to kick-start revenue growth, a worse-than-expected forecast didn’t exactly win investors’ hearts, and they initially sent shares down 6%.

Why should I care?

The bigger picture: Fruit of the union.

Hollywood’s currently on strike, forcing US studios to hit the pause button on productions as workers duke it out over pay. But don’t lose sleep over Netflix just yet: thanks to its global production capabilities, a hefty slice of its content comes from countries that aren’t caught up in the strike. That kind of flexibility served Netflix well during the pandemic – and it means the firm should keep the hits coming this time too.

Zooming out: The couch-potato economy.

Global economies are still wobbly, and consumers are feeling the pinch. But that could actually be good news for Netflix: see, the tighter the purse strings, the more likely people are to stay in – getting their kicks from Netflix rather than splurging on pricey nights out. Plus, with its rivals tightening their belts in these tough times, Netflix could find itself with less competition too. Throw in the firm’s new, cheaper, ad-supported offering, and Netflix could still be set for a healthy year, if it plays its cards right.

What’s going on here?

British inflation is shrinking from its former peaks, according to data out on Wednesday.

What does this mean?

The UK's inflation rate has been on a wild ride recently – outpacing expectations for the past four reports despite interest rates’ uphill scramble. But in June that hot streak finally cooled off: overall prices rose 7.9% compared to the same time last year, the lowest reading in over a year and the biggest undershoot of expectations since July 2021. That was partially down to sliding fuel prices and grocery bills, but they weren't the only heroes: core inflation, which overlooks those volatile food and fuel expenses, also fell from the previous month’s 31-year high. And given that's one key metric the Bank of England (BoE) uses to monitor underlying price pressures, that’s a pretty promising sign.

Why should I care?

The bigger picture: All in good time.

This data suggests that rate hikes are finally making inflation get in line, after months of uncontrollable leaps and jumps. So it’s no wonder markets are feeling optimistic – predicting that interest rates will now peak below 6% and halving the odds of a 0.5-percentage-point hike in August. But let's not break out the party poppers just yet: Britain’s still got the highest inflation of any advanced economy, and some economists think it’ll be 2025 before it comes down to the central bank’s 2% target.

For markets: Building hopes.

The prospect of rates not peaking as high as once feared will have homebuilders smiling their biggest, cheesiest grins. See, when borrowing costs climb, so do mortgage rates – and when mortgage rates go up, sales take a nosedive, and house prices tend to follow suit. That might explain why shares in UK property-related stocks shot up when the news broke: the FTSE 350 homebuilders index even jumped 7%, on track for its biggest one-day gain since 2008.