NEWS
Groundhog Day For Tech, Happy Gilmore For Netflix

Oof. Red across the board. Only one sector closed in the green today and all the indices are in the red. Earnings continue to tell investors a common theme: the consumer is pulling back. Let’s see what you missed. 👀

Today's issue covers Netflix’s earnings, ECB rate cuts incoming (maybe), and Domino’s earnings. 📰

Here's today's heat map:

1 of 11 sectors closed green. Energy (+0.33%) led, & health (-2.29%) lagged. 🟥 

Tech stocks remained in a slump. Nvidia, TSMC, and ASML took significant hits amid broader market rotation, extending losses from the prior session. TSMC's strong quarterly earnings and raised 2024 sales outlook briefly lifted the mood but couldn't prevent further declines. Overall, tech and chip stocks struggled. ⚡️ 

The Conference Board's leading indicators for June came in at -0.2%, slightly better than the expected -0.3% but still showing no signs of setting the markets on fire. This composite index of already-released data is the equivalent of checking yesterday's weather forecast – interesting but hardly a game changer. It's a handy reminder that the recent trend in economic data remains lukewarm at best. 🌡️

The IMF, never short on unsolicited advice, thinks the Fed should hold off on cutting rates until at least late 2024, waiting for clearer signs of inflation returning to 2%. They also suggest scaling back tax exemptions and deductions, like those for employer-paid health care and mortgage interest. And don’t forget their favorite: progressively raising income tax rates, even for those earning under $400,000. Naturally, these recommendations will be lovingly filed under "Thanks, but no thanks." 🗑️

Rumors are swirling faster than a political spin cycle: Joe Biden might be nearing the end of his presidential run. "We’re close to the end," someone close to Biden told NBC News, adding that top Democrats have finally hammered it into his head that his campaign is on life support. Meanwhile, the Atlantic notes that Senator Peter Welch is the lone voice in the Senate calling for Biden to step aside, pushing for an open nomination instead of crowning Kamala Harris. 👀

Boston Fed President Logan is on a mission to get banks cozy with the discount window, not that it matters for the markets or monetary policy. Apparently, the Fed's emergency lending programs are doing their job, and now Logan wants all eligible banks prepped for the next financial apocalypse, whenever that might be. She insists this isn’t a market mover, but it’s crucial for the Fed to get its act together before the next crisis. 🧟‍♂️

Other active symbols: $PFE (-1.08%), $AVGO (+2.91%), $U (-9.51%), $CLSK (-10.54%), $AGEN (-58.88%), $QQQ (-0.45%), and $BTC (-1.65%). 🔥

Here are the closing prices: 

EARNINGS
Netflix Q2 Revenue Soars 17%, Operating Margin Hits 27% 🤯 

Netflix has delivered a solid Q2, flaunting a 17% revenue growth and an operating margin of 27%, up from last year's 22%. Full-year revenue growth is now expected to hit between 14% to 15%, with an operating margin forecasted at 26%. 🤑

In other words, Netflix ($NFLX) is kicking ass.

The Hits Keep Coming

Netflix’s ads business is growing like a weed, with ad-tier memberships up 34% quarter over quarter. The company is building an in-house ad tech platform, set for testing in Canada in 2024, with a broader launch in 2025. Translation: expect more targeted ads while binge-watching your favorite shows. 📺

The Numbers Game

• Revenue: $9.56 billion (Q2), expected to rise to $9.73 billion (Q3)

• Operating Income: $2.60 billion (Q2), forecasted to reach $2.73 billion (Q3)

• Net Income: $2.15 billion (Q2), expected to hit $2.24 billion (Q3)

• Global Streaming Paid Memberships: 277.65 million (Q2), with an expected rise to 284.70 million (Q3)

The Global Reach

In the US and Canada, Netflix generated $4.30 billion in revenue with 84.11 million paid memberships. Meanwhile, Europe, the Middle East, and Africa saw revenues of $3.01 billion, with 93.96 million memberships. Latin America and Asia-Pacific also showed impressive numbers, contributing $1.20 billion and $1.05 billion in revenue, respectively. 🌎️ 

Games and Partnerships

Netflix isn't just about movies and TV shows. Its games initiative is three years old and growing, with new titles based on hit series like Virgin River and Perfect Match. Plus, they’re expanding partnerships with device makers and operators to keep Netflix easy to find and use. 🎮

The Forecast

For Q3, Netflix expects revenue growth of 14% year over year, translating to 19% on a foreign exchange neutral basis. They also predict lower paid net additions compared to Q3 2023 but anticipate maintaining a healthy operating margin. 💹 

Cash Flow and Capital Structure

Netflix generated $1.3 billion in net cash from operating activities in Q2, with a free cash flow of $1.2 billion. The company repurchased 2.6 million shares for $1.6 billion and plans to refinance $1.8 billion in debt maturities within the next 12 months. 💵 

In a nutshell: Netflix continues to dominate the streaming wars.