Money Minute: Netflix Headed for a Fall? Starbucks Loses a Venti Lawsuit
Netflix and Starbucks, two of the market's hottest stocks this year, face some bumps in the road. That and more of the top money stories you need to know today.
There's a new Netflix (NFLX) drama, and this one may not end well for the company. An article in Barron's claims Netflix could be in danger of giving up as much as half of its recent big stock market gains. The report says an ongoing cash shortfall could start to catch up with the company soon, as it continues to invest heavily in new programming. Netflix shares have soared by more than 300 percent over the past year. (Meanwhile, the streaming video giant just rolled out a new look for its TV interface.)
Starbucks (SBUX) has lost a legal battle that will cost it $2.8 billion. An arbitrator ruled that Starbucks prematurely ended a grocery-store distribution agreement with Kraft (KRFT). But Kraft isn't celebrating. It doesn't get the money. Instead it goes to Mondelez (MDLZ), which spun off Kraft about a year ago.
The Dow Industrials (^DJI) fell 32 points yesterday. The S&P 500 (^GPSC) lost 4 a single point and the Nasdaq (^IXIC) was virtually flat.
Johnson & Johnson (JNJ) has reportedly agreed to pay $4 billion to settle thousands of lawsuits tied to a hip implant device that was recalled. The company could be the hook for a lot more. Patients who run into problems at a later date can still file for compensation.
Tesla (TSLA) stock fell Tuesday on rumors the company could recall some of its luxury cars because of several fires. But after the bell, CEO Elon Musk said that the fire risk for the Model S is less than one-sixth the average for a gas-fueled vehicle, that the cars' safety features probably saved the drivers (none of whom were injured), and that no recall is planned.
Shares of the trucking company YRC Worldwide (YRCW) are about to skid off the road. The company posted a much bigger than expected quarterly loss. Its heavy debt load is increasing pressure on YRC to consider filing for bankruptcy protection.
But investors are hungry to pick up shares of the sandwich chain Potbelly (PBPB) following better than expected earnings. Potbelly stock doubled in price on the first day of trading last month, but has lost ground since then.
-Produced by Drew Trachtenberg