It Was A Big Week For Tech Earnings
Netflix, Tesla, AT&T, Iridium and Taiwan Semiconductor all printed Q3s this week. We take a look at each of them.
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Netflix Moons, Tesla Swoons
Tech earnings season got going in earnest this week, with reports in our coverage universe from NFLX, TSLA, IRDM, T and TSM. A mixed set of reports. Let’s start with Netflix, since it was a good one and the stock popped - and then stayed up! - despite the general gloom in equity markets all week.
NFLX 0.00%↑ as you know has been restructuring its pricing packages to drive (1) ad revenue and (2) less unauthorized password sharing. The company has also been raising prices. Well, this all came together to deliver an excellent quarter.
Growth accelerated, cashflow margins were up a lot, leverage dropped, and the stock moved up 16% or so in a very difficult market. Right now the stock trades at the following multiples:
If you think the revenue growth is likely accelerating, and you look at the existing rate of growth of cashflows, the current $400-and-change isn’t such a bad price. Technically speaking the name could go much higher - to at least the all time high of $701, and potentially further.
The Netflix Bull Case - Full Page Chart, Here
If markets find their feet in the coming weeks we may expect NFLX 0.00%↑ to further benefit from the tailwind. We are long NFLX in staff personal accounts.
Now let’s take a look at Tesla $TSLA.