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Key takeaways from Netflix’s (NFLX) third-quarter earnings as stock gains. (00:23) Forward Air (FWRD) spiked into close after report of formal sales process. (01:58) Stripe (STRIP) in talks to acquire startup Bridge for $1B: Forbes. (03:05)
This is an abridged transcript of the podcast.
Netflix (NASDAQ:NFLX) is up 5% premarket after the company easily topped expectations for profits and user growth in its third-quarter earnings report.
Revenues grew 15% year-over-year, to $9.825B, and the company said it expected 15% growth for 2024 after similar expectations for the fourth quarter. Meanwhile, operating margin rose to 30% from a year-ago 22%, leading Netflix (NFLX) to bump its full-year expectations to 27% from 26%.
After some concerns in 2022 about membership growth topping out, the company has moved into a steady period of double-digit growth of users — and this quarter, it again topped expectations, adding 5.07M global paid net members (a 14.4% growth rate) to land at 282.72M global paid memberships.
The story from previous quarters about an ad-supported plan proving even more profitable than expected continues. It has been nearly two years since Netflix launched its advertising business.
The company said, “Our ads plan allows us to offer a lower price point for consumers, which is proving to be popular: In Q3, it accounted for over 50% of sign-ups in our ads countries and membership on our ads plan grew 35% quarter over quarter.”
The company notes that it is still “working to improve our monetization by refining our plans and pricing.”
Forward Air (NASDAQ:FWRD) closed 6% higher on Thursday and is up 1% in premarket action after a report the company will initiate a formal sales process.
According to a FreightWaves report on Thursday, which cited people close to the matter, the company retained two investment banks for a sales process.
The news comes as activist investor Alta Fox earlier this month said it was pushing for an immediate strategic review and wants the company to start a formal sales process. AltaFox said it owns an over 3% stake in Forward Air (FWRD).
The Alta Fox push comes after fellow activist Ancora Holdings in August urged Forward Air (FWRD) to start a strategic review and evaluate a sale. Ancora, which has a 4% stake in Forward Air, hinted that it could initiate a proxy contest to “replace several board members” if the company did not start a review.
Also in August, Clearlake Capital, Forward Air’s second-largest shareholder with a 13.8% stake, said in a regulatory filing that it may engage with management, the board and others to discuss strategic alternatives.
Infrastructure payments company Stripe (STRIP) is in negotiations to acquire crypto stablecoin infrastructure startup Bridge for $1B.
Forbes reported Thursday, citing three people familiar with the talks that a deal, which either side could walk away from, is likely the largest for Stripe.
Potential hurdles include regulatory issues and compensation for employees.
Forbes said Bridge has received interest over a potential Series B funding round after raising $58M in total funding.
Neither Stripe nor Bridge immediately responded to requests for comment by Seeking Alpha.
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Catalyst watch:
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Procter & Gamble (PG) will hold its earnings call at 8:30 am. The key metric to watch is organic sales growth, which is forecast to be up 2.2% year-over-year, split between incremental pricing and volume gains. The P&G update from management on the upcoming conference call could be of interest to peers Church & Dwight (CHD), Kimberly-Clark (KMB), Colgate-Palmolive (CL), and Clorox (CLX). Notably, Glatfelter (GLT) derives 16% of its revenue from P&G and could be impacted as well.
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Seeking Alpha VP of Quantitative Strategy Steve Cress will speak at the Orlando MoneyShow at 1:15 pm.
Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. Crude oil is up 0.2% at $70/barrel. Bitcoin is up 1% at $67,000.
In the world markets, the FTSE 100 is down 0.2% and the DAX is up 0.2%.
On today’s economic calendar:
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10:00 am Minneapolis Federal Reserve Bank President Neel Kashkari to moderate keynote policy panel before the “Macroeconomic Policy Perspectives: Banking, Regulation, and Macroeconomic Outcomes” conference hosted by the Federal Reserve Bank of Minneapolis.
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12:10 pm Federal Reserve Board Governor Christopher Waller to speak on “Decentralized Finance” before the Nineteenth Annual Vienna Macroeconomics Workshop at the Institute for Advanced Studies.
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