19 October 2023
If you are covering the latest financial results from Netflix and/or TSMC, please find below comments from Ben Barringer, equity research analyst at Quilter Cheviot:
Netflix
“After a difficult couple of years, Netflix’s turnaround is complete, as its recent efforts to crack down on password sharing and subscribers leaving have paid off. Its latest set of numbers were strong, with subscriptions significantly better than the market was expecting and margins growing too.
“Indeed, it now guides its sales growth to be back in double digit growth, and there is no reason that it cannot kick on from here and cement its place at the top of the film and TV hierarchy. It will be introducing further price rises in the US from 2024, and with a strong content slate lined up, and the fact it is less impacted by the US writer and actor strikes, it is set up for a strong future.
“It will continue to look to keep a lid on its content costs, but at the same time innovating, particularly in the sports world. It recently announced an F1 and golf crossover event, and shows it is dipping its toe in the water when it comes to sport. There will come a day where Netflix is showing live sport, but for now it will be more content creating its own leagues and ideas than having to negotiate with the likes of the NFL or Premier League.”
TSMC
“Things are still tough for TSMC as the global economic slowdown hurts revenues. Sales were down 11% on the year, but as with other players in the market, we may be reaching a trough as the numbers look more positive quarter on quarter.
“Demand for consumer electronics, PC and smartphones has fallen. AI demand is making up for some of that loss, but it is not yet a key driver for them compared to the likes of Nvidia. Geographically it continues to diversify its business and explains why it has kept capital expenditure in its previously stated range, rather than cut it as was expected. TSMC is opening new fabs in Germany and Japan to increase exposure to the industrials and autos sectors, and it will need more of these types of initiatives to help broaden out the business and not be reliant on consumer electronic demand."
