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- 🗞️ Netflix Has No Chill
🗞️ Netflix Has No Chill
Earnings preview: AXP, MMM, SCHW
Market Performance
S&P 500: 6,297.36 (+0.54%)
Nasdaq: 20,885.65 (+0.75%)
Dow Jones: 44,484.49 (+0.52%)
Netflix Warns of Margin Pressure
Netflix (NFLX) proved that streaming dominance still pays dividends, posting a solid earnings beat as Q2 revenue surged 16% year-over-year to $11.08 billion.
It earned $7.19 per share, beating analyst expectations of $7.08, while net income jumped to $3.1 billion from $2.1 billion in the prior year.
The streaming giant raised its full-year revenue guidance to $45 billion, up from the previous figure of $44 billion, citing healthy member growth and strong ad sales momentum.
Free cash flow increased by 91% to $2.3 billion, prompting management to raise its full-year free cash flow guidance to $8-$8.5 billion.
Despite the strong results, Netflix shares dipped 1% in after-hours trading. Why?
The company warned that operating margins will compress in the second half of 2025 due to higher content costs and increased marketing spend for its extensive content slate.
Our Takeaway
Netflix's warning about margin pressure reveals the brutal economics of the streaming wars.
While revenue growth remains robust, Netflix is telling investors it will sacrifice near-term profitability to defend its content moat.
This is a classic Netflix approach, prioritizing long-term market position over short-term margins.
For investors, the question becomes whether this content spending will translate into sustainable subscriber growth or if we're seeing diminishing returns on expensive content bets.
Market Overview
Stock futures held steady after a stellar day that saw the S&P 500 notch its ninth record close of 2025.
The broad market rally was fueled by better-than-expected economic data and strong corporate earnings, with 88% of the 50 S&P 500 companies reporting so far beating analyst expectations.
Key economic releases painted a picture of resilient consumer spending and a strong labor market.
Initial jobless claims dropped to 221,000 for the week ending July 12, down 7,000 from the previous week.
Meanwhile, June retail sales jumped 0.6% month-over-month, crushing the 0.2% consensus estimate and rising 3.5% year-over-year. The retail sales surprise comes at a crucial time as earnings season kicks into high gear.
As eToro's Bret Kenwell noted, "If earnings are more upbeat than expected and if management continues to tell a reassuring story about consumer spending, stocks could react favorably."
The data suggests American consumers remain the backbone of economic growth, providing a solid foundation for corporate earnings.
Headlines You Can't Miss
Lucid Group surged 36% after announcing that at least 20,000 vehicles will be deployed over six years using Nuro Driver technology through Uber's platform.
Steven Madden jumped 5% as Citi upgraded the stock to buy, citing underappreciation of the Kurt Geiger acquisition and a favorable shift toward dress shoes.
Archer-Daniels-Midland dropped 2% after Trump announced Coca-Cola agreed to use real cane sugar in U.S. drinks, threatening corn syrup demand.
Starbucks faces headwinds as Jefferies downgraded to underperform, arguing expectations are "too far ahead of reality" with no evidence of lasting improvements.
Elevance Health tumbled 12% despite beating revenue expectations, as Q2 earnings of $8.84 per share missed the $8.95 consensus estimate.
Monarch Casino & Resort soared 20% after reporting Q2 net income jumped 19% year-over-year, with casino revenues up 12.1%.
Coinbase hit new 52-week highs not seen since April 2021 as crypto regulation bills advanced through Congress after a record-setting House vote.
Johnson & Johnson gained momentum as Goldman Sachs raised price target to $185, citing building pharmaceutical momentum and positive earnings revisions trends.
Trending Stocks
PepsiCo (PEP): Pepsi stock jumped 7% after the beverage giant delivered a solid Q2 beat with adjusted earnings of $2.12 per share on revenue of $22.73 billion, topping estimates of $2.03 per share and $22.27 billion, respectively.
Despite facing headwinds in U.S. demand, the company's international strength and pricing power drove results.
CEO Quote🎤: “Our international business momentum continued, while our North America businesses improved their execution and competitiveness in key subcategories and channels.”
Taiwan Semiconductor (TSM): The chip giant's shares surged 3.4% after reporting a record Q2 profit that jumped 61% year-over-year, beating analyst expectations.
The results underscore the continued strength in AI chip demand and TSMC's dominant position in advanced semiconductor manufacturing.
CEO Quote🎤: “Looking into second half of 2025 we have not seen any change in our customers behavior so far. However, we understand there are uncertainties and risk from the potential impact of tariff policies.”
GE Aerospace (GE): The jet engine maker climbed 1% after crushing Q2 expectations with adjusted earnings of $1.66 per share on $10.15 billion revenue, well above estimates of $1.43 per share and $9.59 billion.
It also raised full-year guidance across multiple metrics, signaling confidence in aerospace recovery.
CEO Quote🎤: “We are raising our 2025 guidance and 2028 outlook, with our operating performance and robust commercial services outlook underpinning our higher revenue, earnings, and cash growth expectations.”
What’s Next?
Key Earnings Today 👇
3M (MMM): Q2 revenue forecast at $6.05 billion vs. $6.25 billion last year. Adjusted earnings are expected to grow from $1.93 per share to $2.01 per share.
American Express (AXP): Q2 revenue forecast at $17.7 billion vs. $16.33 billion last year. Adjusted earnings are expected to narrow from $4.15 per share to $3.86 per share.
Charles Schwab (SCHW): Q2 revenue forecast at $5.64 billion vs. $4.69 billion last year. Adjusted earnings are expected to increase from $0.73 per share to $1.07 per share.
Macro News
Preliminary July consumer sentiment reading expected at 61.8, up from 60.7 prior
Continued focus on retail spending strength and labor market resilience
S&P 500 tracking for 0.6% weekly gain with Nasdaq leading at 1.5%
Investor Tim Seymour warns, "U.S. exceptionalism has peaked" as global assets outperform
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