Netflix is expanding into the videogame industry.
Getty Images/AFP/AFP/AFP/AFP/AFP/AFP/AFP/AFP
Size of the text
The issue with meme stocks is that reality can occasionally get in the way. Consider
GameStop,
which exploded onto the investment world in January, landing its champion on Reddit Wall Street Bets a starring part in a Congressional hearing and possibly a film or two
Sign up for the Barron’s Daily newsletter, which includes exclusive commentary from Barron’s and MarketWatch writers on what you need to know for the day ahead.
At Wednesday’s close, the videogame retailer’s stock was still trading at $167 per share. Although this is a far cry from the peak of $483 reached when GameStop fever was in full gear, it still gives the unprofitable company a valuation of 72 times cash flow. Then the news arrives that
Netflix
is expanding into gaming, driven by a former executive from Electronic Arts and Facebook. At first glance, nobody cares — the video quality of games streamed over Netflix appears to be rather low in comparison to what Xbox or Playstation customers may expect. Netflix may also bring games to mobile phones, although that sector is already quite crowded. But it’s not such a stretch to envisage Netflix as the pipe that delivers games in the same way that it does movies and television series. Under the supervision of former Chewy founder Ryan Cohen and the slew of former Amazon executives he’s hired, that appears to be the position GameStop wants for itself. GameStop’s stock fell 6% in after-hours trading, while Netflix’s stock rose 3% in the extended session. To return to reality, there are currently no Netflix games available, and there is no mention of a Netflix gaming platform. Maybe now is the time for Netflix to become a meme stock. —Steve Goldstein *** In the most recent episode of Barron’s Streetwise podcast, columnist Jack Hough speaks with the CEO of Generac, a home generator firm whose stock has risen twice as quickly as Tesla’s. ***Inflation Running Faster Than Expected, But Fed Sees It as Temporary Inflation has increased noticeably and is likely to remain elevated in the coming months until it cools off, Federal Reserve Chairman Jerome Powell told the House Financial Services Committee on the first day of his two-day visit to Capitol Hill.
As Powell noted on Wednesday, the last three monthly inflation readings—including June’s 5.4 percent one-month gain—have been higher than projected. According to the Fed, inflation will rise this year, but only for a short time.
Consumer prices in the United States increased at their quickest rate in 13 years in June. The producer-price index, which measures the prices businesses pay for their goods and services, increased by 7.3 percent in June compared to the same month last year.
The Beige Book, a compilation of economic observations from the Fed’s 12 districts, revealed solid demand for a wide range of products and services, including new and used vehicles, travel, and tourism.
Larry Fink, CEO of BlackRock, the world’s largest asset manager, told CNBC that he does not believe inflation will be temporary. “I believe inflation will become more systematic,” he remarked on Wednesday. “Now we’re stating that jobs matter more than consumerism.”
What’s Next: According to the Fed’s Beige Book, businesses are unsure when they will be able to raise production to meet all of the unmet demand. Due to bottlenecks, they are still unable to obtain many supplies on schedule, and positions stay unfilled, rising material and labor expenses. —Liz Moyer***China’s Growth Slows in Second Quarter, But Remains Resilient The Chinese economy slowed marginally in the second quarter, but remained resilient and balanced as domestic demand outperformed expectations.
China’s GDP increased 7.9% in the quarter ended in June, in line with expectations, and over 13% in the first half, compared to the same period in 2020, when the Covid-19 pandemic struck.
The National Bureau of Statistics reported Thursday that industrial output climbed by 8.9% in the third quarter, above expectations, as did retail sales, which increased by 13.9 percent.
According to economists, China appears to be on track to fulfill the government’s official 6 percent GDP objective for this year. Last week, the Chinese central bank slashed reserve requirements for the country’s banks in attempt to aid the recovery.
The country’s customs administration announced earlier this week that imports surged by 37% in June, well outpacing the 32% gain in Chinese goods exports.
What’s Next: When the economy’s performance is compared to the same period in 2020, China’s growth may appear to decline in the second half of the year due to base effects. However, the present recovery appears to be more durable than expected, reducing the need for additional government or central bank assistance. ***Facebook Joins Amazon in Requesting FTC Chairwoman Recuse Herself
Facebook
wants FTC Chair Lina Khan to recuse herself from the agency’s pending antitrust action against Facebook, claiming that her long history of criticizing the company and others prohibits her from being impartial.
Khan’s recusal was petitioned by Facebook two weeks after the election.
Amazon,
Khan has been requested to recuse herself from the tech giant’s pending acquisition of film production and distribution business MGM Holdings, as well as any other antitrust proceedings affecting the company.
Khan’s work on a 16-month congressional investigation into internet businesses was mentioned by Facebook in journal publications, public declarations, now-deleted Twitter tweets, and her work on a 16-month congressional inquiry into tech companies. “Throughout her professional career, Chair Khan has repeatedly and very publicly decided that Facebook is guilty of antitrust violations,” according to the statement.
Khan lobbied for the FTC to revoke its approval of Facebook’s acquisitions of Instagram and WhatsApp while working as a legal director for the Open Markets Institute, a political advocacy group. The FTC’s action against the corporation is heavily based on these mergers.
The FTC has yet to respond to Facebook’s petition. When asked if she would have to recuse herself from cases involving tech companies because of her former work, Khan said she did not have any financial conflicts that would need her to disqualify herself under ethics regulations.
What’s Next: The FTC’s complaint against Facebook was dismissed by a federal judge on June 28 as legally insufficient, but the regulator was given 30 days to reconsider its arguments and rework its suit. Any new litigation would be subject to a vote by a government agency presently led by Khan. Max A. — Airlines Are Returning to Profitability After Pandemic Cherney and Janet H. Cho***Airlines Are Returning to Profitability After Pandemic For the First Time Since the Pandemic Airlines are returning to profitability for the first time since the pandemic.
Delta Airlines is a commercial airline based in Atlanta, Georgia.
was the first airline to disclose second-quarter profits on Wednesday, reporting a profit as domestic leisure travel recovered.
Delta reported a quarterly profit of $1.02 per share, excluding extraordinary items. The results were better than analysts’ expectations, which predicted a loss of $1.33 per share.
Delta’s stock fell 1.6 percent on Wednesday, maybe due to the fact that its results were not unexpected. In anticipation of a busy summer travel season, the airline anticipated months ago that the second quarter would be a tipping point for profitability.
The American Airlines Group is a conglomerate of several airlines
In addition, the company provided a favorable update, predicting a “slight” pretax profit in the second quarter. The airline also announced that, excluding special items, it was profitable in June for the first time since December 2019.
While vacation travel in the United States has recovered, The Wall Street Journal claimed that a full recovery for airlines is still a long way off because business and foreign travel remain dismal.
What’s Next: Delta’s prognosis was also positive. Travelers are booking flights further in advance, according to the report. Airlines such as
United Airlines Holdings is a company that owns United Airlines.
new planes are being ordered In the following weeks, other carriers are expected to post earnings. —Mary Romano and Daren Fonda***U.S. Coronavirus Cases Have More Than Doubled in Recent Weeks The average number of U.S. Coronavirus cases has more than doubled in recent weeks. According to Johns Hopkins University, the number of Covid-19 cases has increased in three weeks to more over 23,000 cases every day. Summer socialization, a lower vaccination rate in some locations and among younger people, and the Delta strain are all blamed by health authorities for the rise.
According to the Centers for Disease Control and Prevention, the more easily transmissible Delta variation accounted for an estimated 57.6% of new cases in the United States as of July 3, including roughly 87 percent of new cases in the region that includes Iowa, Kansas, Missouri, and Nebraska.
For the first time in months, new cases in Los Angeles County surpassed 1,000 for three days in a row. In Missouri, the number of new infections has increased by 63 percent in the last two weeks.
Despite the fact that the Delta variety is the most contagious, Ajay Sethi, an associate professor at the University of Wisconsin-Madison, believes that “there are sections of the country where too many individuals have not yet gotten vaccinated and incorrectly believe that the pandemic is over.”
Due to pressure from Republican state legislators, Tennessee’s state health department has ceased urging adolescents to obtain Covid-19 and other vaccines, and will no longer send postcards reminding them of their second vaccine doses./n
Read More
