SAN FRANCISCO: A wave of quarterly reports from Netflix and other top-tier, high-growth companies starting on Wednesday will test Wall Street's willingness to extend a recent really driven by expectations of lower interest rates.
Still, the leading video entertainment company is up 2per cent since its weaker-than-expected quarterly report in April, and up 37per cent year to date. Mark Stoeckle, senior portfolio manager at Adams Funds, said his Diversified Equity Fund is overweight Netflix due in part to its strong original content. The fund is underweight Facebook on expectations that the company has not fully recognised the regulatory challenges it faces, including in relation to its plan to launch a cryptocurrency, which has faced a backlash from governments and central bankers since it was unveiled last month.
Since 2002, Netflix's second-quarter reports on average have been followed by a 5.9per cent decline in its stock the following day, according to Bespoke Investment Group. That compares to an average increase of 0.6per cent in the following trading day across all quarters for Netflix. Facebook has rallied 56per cent in 2019 and is 6per cent short of the record high it set a year ago, just before it warned of a multi-year squeeze on its business margins, sending its stock into months of decline as investors worried about fallout from the company's mishandling of users' personal information.
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