Reed Hastings' Comments Send Netflix Falling
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The big economic news this morning was the latest jobs report, which wasn't great but showed that the U.S. economy created 148,000 jobs in September. That and a few decent earnings reports have been enough to send the major U.S. indexes all higher. As of 1:05 p.m. EDT the Dow Jones Industrial Average is up 49 points, or 0.32%, while the S&P 500 is higher by 0.46% and the Nasdaq has gained 0.11%. As earnings season continues to roll on, investors are being surprised by quarterly results, and share prices are making some large moves.
One example today is luxury handbag and fashion designer Coach's earnings report this morning. The company missed revenue estimates of $1.19 billion with sales of just $1.15 billion but managed to beat earnings-per-share expectations by $0.01, posting EPS of $0.77. Shares are down more than 7% as investors look to the future and see slow, if not declining, growth in some markets. Coach reported that while U.S. sales fell 1%, international sales figures increased by only $2 million when compared to last year. This is a sign that the brand may be losing traction and that the days of rapid growth are now behind the company.
Another big mover today is Whirlpool , whose shares are up 10% after the company reported earnings. Whirlpool beat EPS estimates of $2.61 with earnings of $2.72 per share but missed revenue estimates of $4.74 billion, posting $4.68 billion in sales. But shares have risen so high today because the company boosted its full-year guidance to a range of $9.90 per share to $10.10 a share. Analysts had previously expected full-year earnings to hit about $9.97, as the company's previous guidance put earnings somewhere in the range of $9.50 to $10.00. Unlike Coach, Whirlpool shows continued growth in the future, and the positive comments from management are giving investors the confidence to put more money to work in Whirlpool's stock.
While positive comments from management about a business can give shares a boost, negative comments can send the stock falling, which is the case with Netflix , down 6% today. Despite crushing earnings yesterday and revealing booming subscriber growth, Netflix founder and CEO Reed Hastings made some disturbing comments about the company's share price yesterday. During the company's conference call, Hastings said that "momentum investors" are "driving the price more than we like normally." While Hastings acknowledged that there is nothing he nor anyone else in management can do about that, the fact that he raised the matter is concerning. In a nutshell, even the CEO believes the stock is getting a little expensive, and he's warning investors that the share price is being pushed higher not by fundamentals but by momentum. Some investors may say this is not a good move for a CEO, but I commend Hastings for making it known that he feels the stock price is getting a little frothy.
Netflix's Future Still Looks Bright
Americans reportedly spend nearly 34 hours a week watching television! With television viewing taking up almost as much time as the average work week, the potential for profits in the space is enormous. The Motley Fool's top experts have created a new free report titled "Will Netflix Own the Future of Television?" The report not only outlines where the future of television is heading, but offers top ideas for how to profit. To get your free report, just click here!
The article Reed Hastings' Comments Send Netflix Falling originally appeared on Fool.com.Fool contributor Matt Thalman has no position in any stocks mentioned. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513 . The Motley Fool recommends Coach and Netflix. The Motley Fool owns shares of Coach and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.