Market Overview

Netflix Soars Again; Apple Continues to Plunge

Netflix Soars Again; Apple Continues to Plunge
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Netflix (NASDAQ: NFLX) is soaring for the second day in a row on Friday after the company released its fiscal fourth-quarter earnings results on Wednesday after the closing bell. The stock soared 42 percent during Thursday's trading session and has continued to rally sharply into Friday. At last check, shares were up more than 14 percent to around $168 after opening the day around the flat-line.

The company reported a surprise profit and guided for above consensus earnings per share in the fiscal first-quarter. In the fourth-quarter, Netflix reported earnings per share of $0.13 which was way ahead of Street consensus which called for a loss of $0.13 per share. Revenue in the quarter was $945.24 million versus estimates of $934.12 million.

Net subscriber growth in the period was above previous estimates with the company adding 2.05 million new domestic streaming customers in the quarter. The company said that it closed 2012 with 27.2 million U.S. online customers.

Previously, Netflix said that it expected fourth-quarter net subscriber growth of 1.3 million to 2 million streaming U.S. customers and could finish the year with up to 27.1 million subscribers.

Looking ahead to the first-quarter, Netflix said that it sees earnings per share of breakeven to $0.23 on revenue of $1 billion to $1.03 billion. This is well-ahead of current consensus estimates of a $0.09 loss on revenue of $970 million.

Netflix had a short interest above 24 percent heading into the company's quarterly report. It would appear that the massive move in the stock is being driven in part by heavy short covering. Some short-sellers are experiencing significant losses in Netflix as the stock is sitting at its best levels since September 2011 and is already up 81 percent in 2013.

While Netflix soars on Friday, market darling Apple (NASDAQ: AAPL) remains under pressure. The company reported disappointing earnings results on Wednesday after the market close and shares closed down more than 12 percent on Thursday. During Friday's trading session, Apple shares were last trading down around 1 percent after retracing earlier steeper losses.

The stock is now sitting at 11-month lows at roughly $445. The sell off in the name is being driven by slowing growth at the technology giant and technical factors. Apple reported net income of $13.08 billion or $13.81 per share, versus $13.06 billion or $13.87 per share, in the year ago period. This came in ahead of analysts' consensus EPS estimates of $13.44.

Revenue was $54.51 billion versus $46.33 billion last year. This came in below analysts' consensus revenue estimates of $54.73 billion. Looking ahead to the fiscal second-quarter, Apple sees revenue of $41 billion to $43 billion. This is below current consensus of $45.63 billion, triggering concerns of slowing growth at the company.

Apple shares are now down almost 17 percent in 2013 and more than 27 percent over the last 3 months. In addition to Apple's revenue miss in the first-quarter and its light guidance for the second-quarter, the stock is also facing technical headwinds. The stock has been so heavily owned on Wall Street that there are a significant number of incremental sellers now that Apple's uptrend has been convincingly broken.

Once downside momentum has been established in such a heavily owned stock, it has the potential to snowball. It would appear that this is what is taking place in Apple.

Posted-In: Earnings Long Ideas News Guidance Short Ideas Technicals Intraday Update Movers Best of Benzinga

 

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