Happy Manic Monday to you all. Just a friendly remainder that tomorrow is the official deadline to file your 2017 tax returns, don’t play with Uncle Sam lol. The mark opened and closed upward for the first trading day this week. Both the S&P 500 and the Dow were up 0.81% and 0.87% respectively. The earnings of some corporations and announcements of others caused buying and positive outlook
The two biggest news stories involving us (because they’re in our portfolio) involved Amazon and Netflix. Netflix nears a $150B market cap as its subscribers continue to balloon. Netflix, again, beat out some expectations Wall Street held for the first quarter and provided a pretty good outlook for the next quarter as well, where it said it expected to add around 6.2 million new subscribers. In the first quarter, Netflix added 7.41 million new subscribers — around 2 million of them domestic and the rest internationally.
The strong subscriber growth came in well ahead of Wall Street’s estimates, helping send Netflix stock up 6% in after-hours trading Monday. Netflix has now committed $17.9 billion to streaming content deals, up from $15.3 billion a year earlier. This underscores Netflix commitment to becoming a powerhouse of original content.
E-commerce giant Amazon Inc. is reportedly scrapping plans to sell and distribute medicine to hospitals. That’s not to say that Amazon Pharmacy is off the table forever, but for the moment the company will just sell less sensitive medical supplies to hospitals and smaller clinics through its Amazon Business unit. Nonetheless, the setback reflects the complexities and barriers to entry facing the medical supply and pharmaceutical industries, even for a cash-rich, far-seeing company like Amazon.
Both securities I think are extremely excellent long term investment plays with spectacular room to grow even with their reality sizes and near monopolies on their respective markets. With more earning expected out this week it’s essential to be on the lookout for great companies that miss or just meet earnings that pull back and will be attractive bargain prices to get in on.
As always have a productive professional week and an even better investment week. And I’ll be talking with you all soon.
Jamaal W Vetose
Director of Research and Analysis