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Netflix is coming for your password - The Weekly Scoop

This week, Netflix disappoints Wall Street, Tesla’s margins slip, but Microsoft’s AI Copilot steers the stock in the right direction. With earnings season well underway, let’s break it all down in The Weekly Scoop!

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Netflix slides 9% after leaving Wall Street disappointed 🍿

Netflix, but no chill: Investors had reason to feel pretty relaxed heading into the company’s Q2 earnings call. The password crackdown left the streaming giant with almost 6 million subscribers and net profit of $1.5 billion. So, what went wrong?

  • Victim of their own success: Whilst the decision to crack down on passwords has undoubtedly paid off, Netflix said it expects next quarter’s revenue to be $8.5 billion; $200 million shy of analyst predictions. Investors were left feeling the stock might be overvalued, despite its recent success.

  • Sell, buy or hold: Netflix is performing well, but remember, share price is a reflection of how investors view the stock and not its actual performance. That’s why despite impressive earnings, Netflix has fallen. Could it be a buying opportunity? Who knows!

Tesla drops 6% thanks to a slip in margins 🏎️

A bumpy week for investors: Tesla shareholders started the week feeling optimistic as the first Cybertruck finally rolled off the assembly line. Unfortunately, the good news was short-lived as the EV giant reported weak operating margins in its Q2 earnings report.

  • All’s well, until it isn’t: Regular readers of The Weekly Scoop will know Tesla has had a good quarter so far. It’s delivered a record number of vehicles and announced almost $25 billion in revenue. So, why are shares down? 

  • Margins, margins, margins: Tesla has been slashing its prices for months now. This is great for sales figures and revenue numbers, but it isn’t good for operating margins which fell to 9.6%, the lowest level in the past five quarters. What’s next in the Musk master plan?

Microsoft’s Copilot steers the stock to a 5% gain ✈️

A profitable price tag: Microsoft shares jumped 5% this week, following the $30 price tag that will come with Microsoft 365 Copilot, an AI-powered version of the productivity platform.

  • More revenue streams for Teams: From Windows and gaming to LinkedIn and cloud tech, Microsoft makes money in a number of ways. With Copilot, it's just added what looks to be another profitable revenue stream.

  • ChatGPT meets Teams: Summarising meeting notes, writing emails and generating content are some features Copilot will offer. The extra feature has investors excited that the second most valuable company in the world could become even more valuable.

What have we learned this week? 🤓

  • Revenue is vanity, profit is sanity: As an investor, it’s important not to get too carried away with revenue figures. Remember, selling a glass of lemonade for £2 isn’t impressive if it costs £3 to make.

  • Share price is based on perception: Share price isn’t a reflection of how a company is performing, but rather how investors believe the company is performing.

  • Microsoft is leading the AI charge: Microsoft’s most expensive business plan is around $20 per user per month, so adding on an extra $30 could be risky. But when you’re leading the AI charge, people are likely to pay for the best.

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*Figures correct as of July 20th 2023.

Past performance does not guarantee future results. Capital at risk when investing. This content is for educational purposes only. Shares does not provide investment advice. If you are unsure about anything, please seek advice from an authorised financial advisor.

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James Ashoo

Senior Content Writer

James has been investing for over five years. His aim is to explain the hard stuff, easily! When he's not chewing your ear off about stocks and crypto, he'll most likely be telling bad jokes.

Harjas Singh

Harjas Singh

Chief Product Officer & Co-Founder

With a wealth of experience in fintech, Harjas is the man in the know when it comes to all things product. Investing features, chatting capabilities and thriving communities – he oversees all development on the Shares app!

Harry Harrison

Harry Harrison

Finance Writer

Harry is an experienced business writer, with a love for all things tech. In his free time, he enjoys reading, playing sport and winning at chess. He also loves posting inside the Shares app!