Communications Services Stocks Tumble After Netflix Earnings Disappointment

Communications services companies declined after Netflix's earnings disappointed investors, with shares of the streaming giant falling due to slower-than-expected subscriber growth. Paramount shares also dropped following the cancellation of "The Late Show" with Stephen Colbert, while Vivendi's shares rose after France's market regulator required its main shareholders to bid for full ownership of the publicly traded affiliate.

Communications services companies experienced a mixed bag of reactions following Netflix's Q2 earnings report, which disappointed investors due to slower-than-expected subscriber growth. Netflix shares slipped in late trading, despite a better-than-anticipated earnings report, as its subscriber growth lagged some investors' estimates. Shares of the streaming service are more than 40% higher for the year to date [1].

Publicis Groupe, a French advertising conglomerate, rose after securing a string of major account wins, which allowed it to assuage analysts' tariff concerns and top targets, while raising its growth projections [1]. Meanwhile, Tele2, a Swedish telecom company, saw its shares climb after raising its full-year earnings guidance, supported by strong cost efficiencies [1].

In contrast, Paramount shares dropped following the cancellation of "The Late Show" with Stephen Colbert. However, Vivendi's shares rose after France's market regulator required its main shareholders to bid for full ownership of the publicly traded affiliate [2].

Netflix's Q1 FY25 results showed 12.5% revenue growth and 27% operating income growth, but the company's focus on subscriber engagement and content optimization has led to a pause in subscriber disclosure for the current quarter [2]. The partnership with CANAL+, which could add 8.2 million subscribers, is expected to contribute around 3% subscriber growth [2].

Investors will be closely watching Netflix's Q2 FY25 results, scheduled for release on July 17th. The management's outlook on subscriber growth, ads business, and the CANAL+ partnership will be key focus areas for analysts [2].

References:
[1] https://uk.marketscreener.com/news/communications-services-climb-amid-strong-earnings-communications-services-roundup-ce7c5cded98bf627
[2] https://seekingalpha.com/article/4801158-netflix-q2-preview-anticipating-subscriber-growth-from-canal-plus-partnership