With earnings season in full swing, investors this week mulled the new path forward for many tech and entertainment companies in a post-pandemic world.
Shares in Netflix Inc. cratered by nearly 7% this week after the Silicon Valley darling on April 20 reported a massive slowdown in subscribers for the just-ended period, even though the company exceeded Wall Street estimates on the bottom line.
The streaming platform added 4.0 million paid members, net of member cancellations. The company had guided to 6 million net adds, and analysts had largely expected Netflix to beat that guidance.
Netflix has enjoyed a surge in popularity over the past year as the pandemic kept many people confined to their homes. But some analysts said these latest results indicate that Netflix's pandemic-driven rally could be losing steam.
Loup Ventures managing partner Gene Munster, who predicts Netflix will be this year's worst performer in the so-called FAANG grouping — including Facebook Inc., Apple Inc., Amazon.com Inc., Netflix and Alphabet Inc.'s Google LLC unit — called Netflix's latest earnings results a "sign that the world is coming back to normal" at the company's expense.
"Key question, what is [Netflix's] true growth rate?" Munster said in a tweet.
Meanwhile, tech player International Business Machines Corp. got a boost after surpassing Wall Street estimates for the first quarter with a return to year-over-year revenue growth primarily driven by its cloud offerings.
Credit Suisse analyst Matthew Cabral called IBM's first quarter a "much-needed bounce back" and commended the company's continued focus on the hybrid cloud, which refers to a cloud computing environment that uses a mix of on-premises, private cloud and third-party, public cloud services with orchestration between these platforms.
IBM stock ended April 22 trading up 5.76% for the week to date.
In the telco space, AT&T Inc. stock also surged after the company posted strong wireless results for the just-ended period, easing some of the pressure off its struggling DIRECTV business.
Wireless postpaid subscriber net adds reached 823,000 in the first quarter, with postpaid phone net adds of 595,000 and additions from wearables more than offsetting losses in tablet and non-tablet computing devices.
AT&T CEO John Stankey noted during an earnings conference call that 595,000 postpaid phone net adds represented the company's "best net add first quarter in more than 10 years."
AT&T stock ended April 22 at $31.36, up 4.71% from its April 16 close.
Turning to Apple, the tech giant this week unveiled a refreshed iPad Pro and iMac equipped with the company's inaugural in-house developed M1 chip. Chris Rogers, supply chain analyst with Panjiva, a unit of S&P Global Market Intelligence, said the use of the company's proprietary semiconductor technology across several products may help Apple simplify its supply chain.
Evercore ISI analyst Amit Daryanani said he considers the integration of the M1 chip into more Apple products the biggest news from the April event, adding that the company's ability to strengthen its product lineup through vertical integration should improve product functionality and boost margins.
The new iPad Pro also features 5G connectivity, specifically using millimeter-wave spectrum, which can carry massive amounts of data at high speeds, though its shorter wavelengths prevent it from traveling long distances and penetrating certain surfaces.
Apple also revealed updates to its Apple Card credit card, podcasting business, iPhone and Apple TV streaming device.
Apple closed April 22 at $131.94 per share, down 1.65% for the week to date.