Netflix reported much better-than-expected results late on Tuesday.
What does this mean?
For two consecutive quarters this year, Netflix has reported a declining subscriber count, so the odds were against it going into current earnings season. But the streaming juggernaut managed to disprove everyone, claiming that titles like "The Gray Man" and "Purple Hearts" were significant needle-movers in the most recent quarter. It was able to surpass its own forecast of one million customers last quarter, adding nearly 2.4 million, which helped its sales and profit narrowly outperform analysts' predictions. Additionally, because Netflix anticipated even greater growth this quarter, the news was sufficient to persuade investors to ignore the company's weaker-than-anticipated profit estimate. As a result, they pushed its shares up 14% following the announcement.
Source: Google Finance
Why should I care?
The bigger picture: Start-stop entertainment.
In order to maintain this membership growth, Netflix may have determined that a user experience downgrade would be the best course of action. The streaming giant is pushing back the launch of its ad-supported service to the beginning of next month in the hopes that its less expensive $6.99 version - which includes about five minutes of commercials every hour of content - will appeal to budget-conscious entertainment seekers who can't get the same low price from rivals Disney+ or HBO Max. As a pleasant bonus, all that money from marketers would bring Netflix an additional $3 billion in income by 2025, according to some experts.
Source: The Wall Street Journal, Netflix
Zooming out: Netflix won’t share.
The streaming behemoth unveiled the new "Profile Transfer" function this week in an effort to prevent the romantic practice of sharing your Netflix login with a particular someone. With its claim that moving your history and suggestions to a new account will make significant moves and breakups easier, Netflix is likely just trying to crack down on the more than 100 million households who use shared accounts to access the site.
Keep reading for our next story...
Foxconn Thinks It Foxcan
Foxconn, a manufacturer of iPhones, set a high target on Tuesday to produce almost half of the world's electric vehicles (EVs).
What does this mean?
With approximately 50% of the global market for information and communication technology under its control as the largest contract electronics manufacturer, there is no reason to question Foxconn's capacity to expand into new industries. That's doubly true considering that the company, which intends to produce EVs for other businesses, is already making all the right moves: it has created working prototypes to demonstrate its capabilities and has already forged warm alliances with both traditional automakers and EV startups. With cunning tactics like that, it makes sense why Foxconn is displaying such moxie: As early as 2025, the business hopes to hold 5% of the $31 billion global EV market.
Source: Statista
Why should I care?
The bigger picture: There is a world elsewhere.
Not only will this move introduce Foxconn to a new industry, it will also take the company to important new geographic areas. The majority of Foxconn's electronics manufacturing has hitherto been headquartered in China, but given the rising geopolitical tensions between Taiwan and the People's Republic, it seems sense that the company is currently looking for new allies. This recent move undoubtedly demonstrates Foxconn's shift in strategy, especially with new employees in the EV segment headquartered solely outside of China.
Zooming out: Everyone’s panning for gold.
The EV market is now one where victors may make significant profits, therefore now is not a terrible time to start in this sector. Just take a look at BYD, a Chinese electric vehicle manufacturer, which said this week that its quarterly profit may increase 365% to a new high. It seems sense that the sector has attracted Foxconn's attention with growth like that on the table.
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