😰 Netflix has a shocker

Even Bridgerton couldn't save it | At least P&G stepped up |

Hi Reader, here's what you need to know for April 21st in 3:14 minutes.

🔥 Not to blow smoke up our own behinds, but last month’s Crowdfunding Club was a pretty big deal. Whoosh. Next up, you’ll be hearing from the founder and CEO of RYSE – the next big thing in the $158 billion smart home industry. Sign up here

Today's big stories

  1. Netflix reported worse-than-expected quarterly earnings, and the streaming giant’s share price plummeted
  2. Our analyst has dug into a way to trade the global economic recovery that's already risen 120% this year – Read Now
  3. Procter & Gamble’s quarterly earnings came in ahead of expectations, as pandemic cleaning habits die hard

Dishonorable Mention

Dishonorable Mention

What’s Going On Here?

Netflix’s first-quarter subscriber growth came in worse than expected late on Tuesday, and the streaming service wouldn’t like to thank its parents, its agent, or – sniff – its investors.

What Does This Mean?

Here’s the trouble with pocketing a record number of subscribers last year like Netflix did: it sets a high bar for every subsequent earnings announcement. Too high, this time around, with the streaming service only adding four million new subscribers last quarter – two million less than it promised. And too high this quarter as well, by the sounds of things: Netflix admitted it’s expecting to add just a million subscribers versus a predicted 4 million. That matters because new subscribers are a proxy for future income, so while the lower costs of delayed production did push profit over expectations, unimpressed investors initially sent Netflix’s stock down 10%.

Why Should I Care?

For markets: Accountants are sneaky.
Thing is, Netflix’s profit doesn't even account for the full cost of making content, which is spread over a few years even though the company generally pays for everything up front. Investors, then, prefer a figure Netflix can’t obscure with accounting quirks, like how much cash it brings in each year. Or rather, how much it doesn’t bring in: the streaming giant hasn’t made enough cash to cover costs in almost any year since 2012. That’s a tradition it’s promised to end this year, but it might be easier said than done when production fully ramps up again…

The bigger picture: These endless US streaming wars.
Still, a recent survey by Morgan Stanley found that 39% of Americans think Netflix has the best original content of all the streaming services – well ahead of Amazon Prime (12%) and Disney+ (7%) (tweet this). And this update aside, investors seem to agree that the world needs more Emily In Paris: Netflix’s shares have risen about 80% since Disney+ launched, dwarfing the average 15% gains of its competitors.

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2. Analyst Take

The Biggest Trade Of The Recovery?

What’s Going On Here?

There’s a lot of talk around how to invest in the global economic recovery these days, with investors putting particular emphasis on energy and industrial stocks.

And it’s true that those sectors could do especially well. But it’s also true that investors have already pushed their stock prices to dizzying highs.

What you actually want is a trade that still has plenty of upside if the recovery holds up.

And there is a trade like that: an ETF that’s already risen 120% this year, but that’s still 80% off its all-time highs.

It’s not what you’d call glamorous, sure, but it stands to keep benefiting from the recovery – not to mention from big infrastructure spending plans around the world.

So that’s today’s Insight: the ETF that’s more than doubled this year, and why it might still be a great way to profit from the economic recovery.

Read or listen to the Insight here

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Clean Break

Clean Break

What’s Going On Here?

Procter & Gamble (P&G) announced better-than-expected quarterly earnings on Tuesday, proving that – wow! – its home care range really does get sparkling results every time!

What Does This Mean?

One year into the pandemic and P&G’s results suggest we’re still committed to sprucing up our homes and hairdos alike. It’s those segments that did particularly well for the consumer staples giant, driving strong results even as its beauty and family care units missed the mark. And those uneven gains aren’t just expected, they’re why investors are so keen on P&G in the first place: that diversified business model has seen the company latch onto pandemic-driven trends in the last twelve months, and should see it adapt to post-pandemic trends too – whatever they might be.

Why Should I Care?

The bigger picture: Price hikes are coming.
Investors were also focused on P&G’s admission that it’d need to balance out the rising prices of raw materials by hiking the prices of its products. It’s the third big consumer firm to clamp down after Coca-Cola and Kimberly-Clark’s announcements earlier this month, and the move might add to the mounting evidence that inflation is on its way. That’s a scary prospect for investors: central banks are more likely to raise interest rates if prices are rising too quickly, which could hurt company earnings and, in turn, drive stocks lower.

Zooming out: Veganism is the future.
Talking of consumer staples, France’s Danone posted weaker results on Tuesday as the pandemic continues to dent demand for bottled water and baby food. The world’s biggest yogurt maker might want to take a leaf out of Oatly’s book: the plant-based rival officially filed to list on the stock market earlier in the week, and its paperwork revealed that the company’s sales more than doubled last year. In other words, vegan products are only getting more popular – and incumbents like Danone might want to play catch-up.

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💬 Quote of the day

“It is better to be roughly right than precisely wrong.”

– John Maynard Keynes (an English economist)
Tweet this

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📚 What we're reading

🌏 Finimize Events

🙏 NFTs Please

NFTs are suddenly selling for millions of dollars, and those little digital artworks might be making their mark on the digi-verse for a long time to come. So it’s well worth learning what makes a good NFT sooner rather than later – and Eterna Capital’s Andrea Bonaceto will be happy to show you the ropes in Are NFTs A Digital Bargain Or Bubble? later today.

👩‍🎨 Are NFTs A Digital Bargain Or Bubble?: 2pm UK time, April 21st
💡 Investing In Small Stocks: 6pm UK time, April 21st
🏡 The Pros and Cons Of REITs And Real Estate: 1pm UK time, April 22nd
📈 How To Inflation-Proof Your Portfolio: 6pm UK time, April 22nd
🚀 Space: The Final Investment Frontier: 6pm UK time, April 27th
💰 Crowdfunding Club: 1pm NYC time, April 28th
🛢 The Energy Sector’s New Direction: 4pm UK time, April 29th
🔪 How To Cut Through The Spin: 6pm UK time, April 29th
👋 Live Q&A With CEO Max Rofagha: 1.30pm UK time, April 30th
🤒 The Financial Health Check: 4pm UK time, May 6th
☄️ The Future Of Commodities: 6pm UK time, May 12th
💪 Building A Circular Economy: 5pm UK time, May 25th

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