Reed Hastings' Comments Send Netflix Falling

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The big economic news this morning was the latest jobs report, which wasn't great but showed that the U.S. economy created 148,000 jobs in September. That and a few decent earnings reports have been enough to send the major U.S. indexes all higher. As of 1:05 p.m. EDT the Dow Jones Industrial Average  (DJINDICES: ^DJI  ) is up 49 points, or 0.32%, while the S&P 500 is higher by 0.46% and the Nasdaq has gained 0.11%. As earnings season continues to roll on, investors are being surprised by quarterly results, and share prices are making some large moves.

One example today is luxury handbag and fashion designer Coach's (NYSE: COH  ) earnings report this morning. The company missed revenue estimates of $1.19 billion with sales of just $1.15 billion but managed to beat earnings-per-share expectations by $0.01, posting EPS of $0.77. Shares are down more than 7% as investors look to the future and see slow, if not declining, growth in some markets. Coach reported that while U.S. sales fell 1%, international sales figures increased by only $2 million when compared to last year. This is a sign that the brand may be losing traction and that the days of rapid growth are now behind the company. 

Another big mover today is Whirlpool (NYSE: WHR  ) , whose shares are up 10% after the company reported earnings. Whirlpool beat EPS estimates of $2.61 with earnings of $2.72 per share but missed revenue estimates of $4.74 billion, posting $4.68 billion in sales. But shares have risen so high today because the company boosted its full-year guidance to a range of $9.90 per share to $10.10 a share. Analysts had previously expected full-year earnings to hit about $9.97, as the company's previous guidance put earnings somewhere in the range of $9.50 to $10.00. Unlike Coach, Whirlpool shows continued growth in the future, and the positive comments from management are giving investors the confidence to put more money to work in Whirlpool's stock. 

While positive comments from management about a business can give shares a boost, negative comments can send the stock falling, which is the case with Netflix (NASDAQ: NFLX  ) , down 6% today. Despite crushing earnings yesterday and revealing booming subscriber growth, Netflix founder and CEO Reed Hastings made some disturbing comments about the company's share price yesterday. During the company's conference call, Hastings said that "momentum investors" are "driving the price more than we like normally." While Hastings acknowledged that there is nothing he nor anyone else in management can do about that, the fact that he raised the matter is concerning. In a nutshell, even the CEO believes the stock is getting a little expensive, and he's warning investors that the share price is being pushed higher not by fundamentals but by momentum. Some investors may say this is not a good move for a CEO, but I commend Hastings for making it known that he feels the stock price is getting a little frothy.  

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