What to know today

  • Say anything… but that.
  • Netflix is down on its count. 
  • It’s the dawn of the fourth halving.

Thanks, John Williams

It was an innocuous comment, but still.

For a brief moment shortly after lunch on Thursday every major equity index, crude oil, gold, the CBOE 10-Year US Treasury Note Yield Index, the US Dollar Index, and Bitcoin $BTC were in the green on a percentage basis.

It was probably right around then that investors, traders, and speculators started reacting to the mere hypothetical mention of a rate hike by New York Fed President John Williams.

Up until then, the market seemed to be poised for the start of first-quarter earnings reporting by big tech companies, led by Netflix $NFLX.

That earnings are at least a secondary focus is a good thing. There’s a lot of story around central banks, interest rates, and inflation. And it’s important to understand those things.

US Treasury yields spiked after New York Fed President John Williams said that if the data indicated such central banks would raise interest rates.

That’s not to mention geopolitics and war, which are beyond the ken of even the best and brightest among us.

In spite of all of that, at the end of the day, price is the only thing that pays, and for publicly traded companies over the long term that comes down to making money and creating value for shareholders.

At the end of Thursday, NFLX showed, at least based on the metrics it wants to emphasize right now, it’s doing that.

There’s more on NFLX’s first quarter and how it plans to continue creating “engagement and fandom” below.

deep dive

We’re Having a Halving

There’s a lot of meaning here.

It looks like we’ll witness the fourth halving event for the world’s No. 1 cryptocurrency some time today.

These halvings are written into the code supporting the Bitcoin $BTC blockchain. Every four years, the mechanism cuts in half the reward a miner earns for validating a new block in the chain.

After the fourth halving, according to Brian McGleenon of The Block, each new block mined will yield 3.125 BTC, down from 6.25 BTC.

The halvings will continue until the total number of BTC reaches 21 million, an end date embedded in the code that’s still more than 100 years out in 2140.

As of 5:00 p.m. ET on Thursday, The Block’s Bitcoin Halving Countdown Page was showing a predicted date and time of April 19, 2024, at 9:27 p.m. ET. That’s when the network will reach a block height of 840,000.

Bitcoin $BTC continues to be the most dominant force in the cryptocurrency space, recently reaching a new three-year high on that metric.

I’m not entirely sure what that means. I’m not entirely sure it matters.

I’m pretty sure whatever else it may have in common with that shiny rock Bitcoin is the purest price play since gold.

Still the biggest player in what remains the wildest of frontier markets, as my friend J.C. Parets of All Star Charts points out Bitcoin $BTC alone represents over half of the entire market capitalization of all the crypto in the world.

What technical analysts in the crypto space commonly refer to as “BTC dominance” is making new three-year highs.

Volume for spot Bitcoin $BTC ETFs has fallen off after spiking in March. Spot BTC ETFs were approved by regulators in January.

So, what kind of impact will this halving have on the BTC price? There are other factors at play, of course, including the macroeconomic environment.

Risk assets generally are in a strange place right now, waiting for a rate cut that isn’t coming on market participants’ time as persistent inflation raises other kinds of worry.

Consider too that, according to The Block’s Data Dashboard, spot bitcoin ETF volumes have declined since early March. BTC ETF approval in January ushered in many, many more market participants.

There’s also a history of choppiness ahead of halvings.

Still, the co-founder of crypto lender Nexo, Antoni Trenchev, and an executive director of decentralized verification group Identity.com, Phillip Shoemaker, agree that $100,000 could happen in 2024.

Trenchev also told Barron’s that BTC could see the low $50,000s before the halving cycle plays out.

deep dive |
April 19, 2024

We’re Having a Halving


They Bought the Rumor and Sold the News

Netflix had another really good quarter.

The world’s No. 1 streaming service by subscriber count got Big Tech reporting season off to a solid start after the market closed on Thursday, beating its own forecasts as well as Wall Street estimates across its key metrics.

The stock sold off by nearly 5 percent in the after-hours market in what appears to be a “buy the rumor, sell the news” response. As of the close of regular trading on Thursday NFLX was up more than 25 percent year to date. 

New subscriber additions of 9.33 million during the first quarter, driving 14.8 percent growth in sales to $9.33 billion and earnings per share of $5.28, up from $2.88 a year ago.

Wall Street, as tracked by FactSet, forecast revenue of $9.27 billion, earnings per share of $4.51, and net subscriber adds of 5.1 million. NFLX guided to revenue of $9.24 billion and earnings per share of $4.49.

Though it no longer provides specific guidance on the metric, management said net subscriber additions would be below the 13.1 million reported for the fourth quarter but above the 1.8 million reported for the first quarter of 2023. 

NFLX added a net 13.1 million subscribers during the fourth quarter, beating its own forecast of 8.7 million.

Management said revenue growth would accelerate to approximately 16 percent in the second quarter, though new subscriber adds will be lower than during the first three months of the year due to “typical seasonality.”

Netflix $NFLX but its own and Wall Street estimates for new subscriber additions, revenue, and net income for the first quarter.

For 2024, NFLX forecast “healthy” revenue growth of 13 percent to 15 percent and full-year operating margin of 25 percent, up from a prior forecast of 24 percent. 

Management’s stated goal is to increase operating margin on an annual basis, “though the rate of expansion may vary year to year.”

As of Thursday, before NFLX released first-quarter results, Wall Street’s forecast for the second quarter was revenue of $9.52 billion, earnings per share of $4.53, and net subscriber adds of 5.6 million.

NFLX seems to have answered questions about its ad-tier push and the wisdom of messing with its business model.

Whether management’s password-sharing crackdown is a long- or even medium-term driver of new subscriber adds is still questionable, but that entry level ad-supported subscription offer seems to be finding a market.

Of course, what drives engagement and fandom is content.

At the top of management’s list of must-dos “to sustain healthy growth long term” is improving the variety and quality of its entertainment “with more, great TV shows and movies, a stronger slate of games and must-watch live programming.”

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