Stock Market Today: Netflix Stung by a Downgrade

Why Netflix, IHS, and Commercial Metals stocks are on the move today.

Jan 7, 2014 at 9:00AM

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

Expect a strong start to the stock market today, as the Dow Jones Industrial Average (DJINDICES:^DJI) gained a solid 54 points in premarket trading this morning. Earnings season kicks off in a few days, and fourth-quarter profits are expected to climb at a 9.7% pace, while sales grow by 3.8% overall, according to a tally by Bloomberg. Meanwhile, news is breaking this morning on a few stocks that could see heavy trading in today's session, including Netflix (NASDAQ:NFLX), IHS (NYSE:IHS), and Commercial Metals (NYSE:CMC).

Netflix shares are under pressure after an analyst at Morgan Stanley downgraded the stock on concerns over increased competition in the streaming video space. Those worries aren't new, but the timing of this call could give it some traction with investors: Netflix was the single best performing stock in the S&P 500 last year and could stand to cool off after its 300% bounce. On the other hand, the company will soon announce earnings results for the fourth quarter, which was its best quarter by far in 2012. Netflix's report boasted adding 2 million subscribers in that period as consumers snapped up tablets and TVs over the holidays, which helped propel the stock to a 70% gain in the days following the announcement. Netflix's stock is down 2.8% in premarket trading.

IHS this morning reported earnings results for its fiscal fourth quarter. Sales at the data analytics company bounced higher by 35%, and adjusted earnings rose by 3% to reach $1.46 a share. IHS beat analysts' estimates on both the top and bottom line in the quarter as organic sales growth in its subscription business clocked in at a solid 7%. The company's new outlook for the next year targeted revenue growth of about 20%, to $2.2 billion, which is even with Wall Street's expectations. The stock is up 4.3% in premarket trading.

Finally, Commercial Metals today announced results for its fiscal first quarter that included flat sales of $1.7 billion and earnings of $0.39 a share, a 7% dip from last year's tally. The metal producer's profitability was pinched by falling prices for nonferrous metals in the quarter, but overall results were still much improved over the previous quarter, when the company booked just $0.03 a share in profit. Commercial Metals said that construction activity in the current quarter should be depressed by winter conditions, but long-term improvement in construction spending should boost sales after that. The stock is up 2% in premarket trading.

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Fool contributor Demitrios Kalogeropoulos owns shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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