On the rise
Shares of Paramount Global (PARA-Q) jumped on Friday, after Reuters reported Sony Pictures Entertainment and Apollo Global Management were discussing a joint bid to acquire the media company.
Paramount is currently engaged in exclusive deal talks with Skydance Media, an independent studio led by David Ellison, though some investors have urged Paramount to explore other options.
Private equity firm Apollo had earlier made a US$26-billion bid for the company, and a separate US$11-billion offer for Paramount’s film studio.
Its joint bid with Sony, which is still being structured, would offer cash for all outstanding Paramount Global shares and take the company private, a source told Reuters on Thursday.
Sony Pictures would hold a majority stake in the joint venture and operate Paramount along with its library of films, while Apollo would likely assume control of the CBS broadcast network and its local television stations.
Paramount shares are down nearly 7 per cent since April 3 when Reuters reported that the company had began 30-day exclusive negotiations with Skydance. At its last closing price of $10.97, Paramount was valued at US$7.44-billion, per LSEG data.
Paramount Global has lost more than US$16-billion in value since it was formed through the reunion of CBS and Viacom in 2019. The company’s market capitalization fell below US$10-billion in January.
Shares of Canopy Growth Corp. (WEED-T) were higher by 1.1 per cent after Constellation Brands Inc. (STZ-N) announced two of its subsidiaries - Greenstar Canada and CBG Holdings - have converted their common shares in the Canadian cannabis producer into 26.2 million non-voting and non-participating exchangeable shares.
With the move, Constellation no longer holds any Canopy common shares, however the exchangeable shares are convertible into common shares on a one-for-one basis at any time.
Greenstar forgave all accrued but unpaid interest on interest and the remaining principal amount on a payment of a $100-million promissory note due December 2024.
“We view the announcement of the completion of conversion of Canopy shares into exchangeable shares as a favorable development [for Constellation,” said Citi analyst Filippo Falorni. “Post the conversion, STZ will no longer report Canopy equity losses on the equity income line in the P&L starting in F1Q’25 and the carrying value of the exchangeable shares will be on the balance sheet. This removes the dual EPS calculation with and ex-Canopy, and creates more clarity in consensus estimates. Additionally, STZ retains the potential upside in Canopy shares through the exchangeable shares if sale of cannabis in the U.S. market were to become federally permissible.”
American Express (AXP-N) gained after its first-quarter profit vaulted past Wall Street estimates on Friday, driven by an affluent customer base that increased spending as recession fears ebbed.
Amid a turbulent landscape in which concerns over the financial well-being of lower-income consumers have troubled several lenders, American Express’s clientele has shielded the company from significant impact and left it largely unscathed by the challenges that hurt others in the industry.
The New York-based company reported a profit of US$3.33 a share for the three months ended March 31, sailing past analysts’ average expectation of US$2.96 a share, according to LSEG data.
“We’re seeing a lot of growth, especially on the consumer side,” Chief Financial Officer Christophe Le Caillec told Reuters on a call.
Gen Z and millennial customers accounted for more than 60 per cent of new account acquisitions globally in the quarter, the company reported.
Net Interest Income (NII), the difference between income earned on loans and paid out on deposits, grew 26 per cent, to US$3.77-billion, while billed business rose 6 per cent, to US$367-billion in the first quarter.
While most U.S. lenders have expressed optimism about the resilience of American consumers so far, 11 rate hikes by the Federal Reserve over the last two years have made them susceptible to default risks and they have responded by raising provisions.
For the full year, the company maintained prior revenue growth expectations of 9 per cent to 11 per cent and a profit forecast of US$12.65 to US$13.15 a share, it said in a statement.
Shares of Donald Trump’s media and technology company were uon Friday after it asked the Nasdaq exchange to help prevent “naked” short-selling in its shares.
Trump Media & Technology Group (DJT-Q) has alerted the CEO of Nasdaq of “potential market manipulation” in its shares, it disclosed in a filing with the Securities and Exchange Commission.
“Reports indicate that, as of April 3, 2024, DJT was ‘by far’ the most expensive U.S. stock to short,” meaning that brokers have a significant financial incentive to lend non-existent shares,” TMTG CEO Devin Nunes said in the filing.
“Data made available to us indicate that just four market participants have been responsible for over 60 per cent of the extraordinary volume of DJT shares traded: Citadel Securities, Virtu Americas, G1 Execution Services and Jane Street Capital.”
A spokesperson for market maker Citadel said Mr. Nunes was trying “to blame ‘naked short selling’ for his falling stock price,” adding that integrity was central to everything Citadel does.
On the decline
Netflix (NFLX-Q) shares fell 9.1 per cent on Friday, as its surprise move to stop sharing subscriber additions and average revenue per member from 2025 sowed doubts in investor minds about growth peaking in some markets for the streaming pioneer.
The decision to hold back crucial metrics that have moved the stock market comes as Wall Street analysts expect subscriber growth for Netflix in North America and Europe to saturate.
“Investors like transparency and the market has judged Netflix on its subscriber success ever since it has been on the stock market,” said Russ Mould, investment director at AJ Bell.
“To many, it is a valuable metric and hiding it comes at a time when many people are wondering if Netflix has reached maturity in many regions.”
Netflix added new customers in the first quarter, but its second-quarter revenue forecast missed market expectations of US$9.54-billion late on Thursday. It also decided not to report subscriber additions and average revenue per member from the first quarter of 2025.
“While this is partially a sign of Netflix’s unrivaled market share, it also raises questions about the streamer’s ultimate ceiling in the current landscape,” said Brandon Katz, entertainment industry strategist for Parrot Analytics.
Netflix’s slide also weighed on the shares of peers Roku (ROKU-Q) and Walt Disney, which fell 1.5% and 1.2%, respectively.
Other technology companies such as Meta’s Facebook and social platform X too had earlier stopped reporting monthly active users as growth slowed.
For Netflix, investors will also keep a close watch on how sustainable is its paid sharing initiatives, Goldman Sachs analysts said, while the removal of crucial metrics will add to the debate.
On the brighter side, Wedbush analyst Alicia Reese said competitors are likely to continue to struggle in their effort to replace Netflix’s business model, thanks to its “insurmountable lead”.
Netflix said its ad-supported streaming plans helped attract 9.3 million new customers, nearly double the consensus forecast of analysts polled by LSEG, bringing the global tally to 269.6 million at the end of March.
“The bigger question now will be how Netflix continues to keep churn to a minimum, when rivals catch up with their own cheaper plans,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Apple (AAPL-Q) was lower after said it had removed Meta’s (META-Q) WhatsApp messaging app and its Threads social media app from the App Store in China to comply with orders from Chinese authorities.
The apps were removed from the store on Friday after Chinese officials cited unspecified national security concerns.
Their removal comes amid elevated tensions between the U.S. and China over trade, technology and national security.
The U.S. has threatened to ban TikTok over national security concerns. But while TikTok, owned by Chinese technology firm ByteDance, is used by millions in the U.S., apps like WhatsApp and Threads are not commonly used in China.
Instead, the messaging app WeChat, owned by Chinese company Tencent, reigns supreme.
Procter & Gamble (PG-N) declined despite raising its annual core profit forecast on Friday, as it benefits from easing commodity costs and higher product prices of its cleaning and household items.
As raw material prices come down from the peaks seen during the pandemic, major consumer goods companies are seeing a relief from higher production costs.
P&G said it now expects a benefit of about US$900-million after-tax from favorable commodity costs for fiscal year 2024, compared with its earlier forecast of an US$800-million benefit.
The consumer goods giant now expects core earnings per share to rise between 10 per cent and 11 per cent in fiscal 2024, above its prior forecast of 8-per-cent to 9-per-cent growth.
Third-quarter net sales rose to US$20.20-billion from US$20.07-billion a year earlier, but fell short of analysts’ average expectation of US$20.41-billion, according to LSEG data.
P&G has seen a hit to sales from weak consumer spending in its second-largest market China, which is reeling under high youth unemployment, a sluggish property market and deflationary pressures.
This has also led to lower sales for P&G’s beauty brand, SK-II, which has overshadowed gains from steady sales of daily-use products in the United States and Europe.
P&G reported overall flat volumes in the third quarter, while the average prices across its product categories rose 3 per cent.
Net income attributable to Procter & Gamble rose US$3.75-billion, or US$1.52 per share, in the quarter ended March 31, from US$3.40-billion, or US$1.37 per share, a year earlier.
Top U.S. oilfield services firm Schlumberger NV (SLB-T), now doing business as doing business as SLB, fell despite reporting a 14-per-cent rise in first-quarter profit on Friday, in line with analysts’ estimates, as strong oil and gas drilling demand in the Middle East and Africa helped offset weakness in North American activity.
The company, which also reaffirmed its previous guidance of mid-teens profit growth for the full year, forecast a seasonal rebound in activity in the Northern Hemisphere in the second quarter, along with robust activity internationally.
A growing demand outlook will push operators to increase their investments in production and reservoir recovery to boost efficiency and life of their producing assets, CEO Olivier Le Peuch said.
Revenue from SLB’s international segment rose by 18 per cent to US$7.06-billion, compared with US$5.99-billion in the year-ago quarter.
The North American segment’s revenue declined 6 per cent to US$1.6-billion, falling short of analysts’ estimates of $1.65 billion, according to LSEG data.
Sequentially, revenue declined 3 per cent both in North America and in international markets due to seasonality.
SLB said it would look to return US$7-billion to shareholders over the next two years, in part due to its nearly US$8-billion acquisition of smaller ChampionX.
On an adjusted basis, the company earned 75 US cents per share, in line with analysts estimates. Revenue of US$8.71-billion marginally beat expectations of US$8.69-billion.
With files from staff and wires
David Leeder