On today’s episode of Full Court Finance at Zacks, Ben Rains dives into the broader market as the third quarter earnings season starts to heat up. The episode then explores both Netflix NFLX and Amazon AMZN stock ahead of their upcoming financial releases to help investors decide if either tech stock is worth buying at the moment.
The market posted its best week in months last week and followed that up with another strong showing on Monday. The S&P 500 now up over 4% in the last month, as it regains momentum from its early September drop. The positivity comes as Wall Street grows more hopeful about a second stimulus bill, and analysts look to the possibility of a more decisive victory in the presidential election.
The recent climb also suggests that investors are likely expecting improving third quarter earnings results, which the most recent Zacks estimates support. And the market won’t have to wait long for more clarity on Q3 and what’s next, as the big banks such as JPMorgan JPM and Citi C helped kick off the busy part of the earnings season on Tuesday morning.
Netflix added roughly 26 million paid subscribers during the first two quarters of FY20, or just 10% less than it pulled in all of 2019. The coronavirus has also created a unique situation for streaming TV firms, as movie theaters, concerts, and crowded live sporting events are likely to be some of the last things to return to normal.
The largest streaming TV firm in the world does face competition from newcomers such as Disney+ DIS and Apple TV+ AAPL, as well as HBO Max T, Amazon Prime, and others. Yet despite the crowded market, Netflix is poised to grow for years to come in what seems likely to be the future of entertainment.
Amazon, which is also projected to report its quarterly results next week, has benefitted from the social distancing environment, alongside everyone from Zoom Video ZM to Target TGT. The e-commerce and cloud computing powerhouse is built to thrive during the current market conditions and it is set up for continued expansion in a range of growth areas.
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