Market Overview

Netflix Hurt Due to Lackluster Subscriber Gains, Sheds Over $90


Netflix (NFLX) shed over 20 percent from its share prices Thursday as its subscriber growth slowed down, reports from USA Today noted.  

According to the paper’s Friday report, Netflix stocks dropped by $95.43 to $353.16, which it deemed as “another drag on tech shares.” It noted that the Nasdaq Composite index was down by 0.4 percent, while the equally “tech-heavy” PowerShares QQQ Trust, Series 1 ETF slid 0.8 percent.

In a separate report, it was reported that Netflix shares dropped by $107.94 to $340.95 during the Wednesday sell-off. The tech giant’s stocks dipped after it announced that its third-quarter subscriber growth “fell short” of its expectations, USA Today said.

Netflix’s subscriber count failed to outperform last year’s Q3 figures, down to 980,000 during the third quarter of 2014, compared with 1.29 million last year. The news disappointed investors even if the company’s earnings were up 28 percent to $1.4 billion.

Tech stocks may not doing so well during the beginning of the quarter, but experts maintain it’s still best to keep them for the long-term.

“Many commentators have blamed at least some stock-market losses on the technology sector, and particularly on Apple’s supply chain issues. Such selloff post mortems seem to have engendered a good deal of investor angst about technology stocks,” noted Russ Koesterich, a columnist at Barron’s. “My read, however, is that anxiety over technology is premature.”

Koesterich noted the sector’s momentum and ability to outperform the broader U.S. market: “Even after recent selling, technology stocks still stand out as top relative performers year-to-date. Large cap U.S. technology companies, as measured by the S&P 500 Information Technology Index, were up roughly 12% as of late September, easily outperforming the broader U.S. market, as measured by the S&P 500 Index.”

Investors who are uncomfortable with recent trends in the sector and want to cushion the blows of the sector’s downdraft can buy into British tech blue chips like Audioboom Group PLC (LSE: BOOM), which trades on the London Stock Exchange’s AIM platform for growth companies.  

Globally recognized as the “YouTube of Audio,” Audioboom has more than doubled its share prices from 5 GBX to 15 GBX following a reverse merger with One Delta. Arden Partners, an equity research firm and stockbroker in London, gives the stock a “Buy” rating and forecasts the stock to close at 14 GBX by the end of the year.

To buy into the British stock, Jonathan Yates, a staff writer at Benzinga, recommends opening an account with a brokerage firm like Charles Schwab or Etrade. “The commission can be higher but that is worth the cost due to the better execution on the local market for these stocks,” he said.

The company’s stocks continued to soar following the announcement of a recent partnership deal with India’s largest entertainment and media company, The Essel Group, and the rollout of its new app and advertising platform.

A broad market sell-off Wednesday last week due to investors’ fears over Europe’s sinking economy, corporate earnings and Ebola pulled tech stocks down after most of them recorded gains. High-definition camera manufacturer (GPRO) sunk six percent, followed by Intel (INTC), which declined 4 percent after leading tech stocks Tuesday with strong gains.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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