Netflix Crushes on Earnings as Dow Craters 175 Points

Walt Disney stock falls in the selloff as Arcos Dorados slumps for second straight day

Jan 23, 2014 at 6:14PM

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.

During the last decade, a loquacious subset of American investors has grown increasingly disturbed by China's economic influence over U.S. business. As the U.S. was hit by the financial crisis, China continued to grow by leaps and bounds. Now, however, the murmur has grown to a deafening roar, and today's market did nothing to quiet the crowd. A gauge of China's manufacturing sector caught Wall Street completely off guard by showing a contraction in January. Largely ignoring earnings results from U.S. companies, markets turned their attention to Asia, and sold off steeply as a result. The Dow Jones Industrial Average (DJINDICES:^DJI) plunged 175 points, or 1.1%, to end at 16,197. 

Walt Disney (NYSE:DIS), which fell 0.7%, was somewhat insulated from today's pullback, but not entirely. Even though Walt Disney was one of the Dow's biggest gainers yesterday after an analyst cheered the company's ownership stake in A&E, that momentum lost its fight with the bears today. If you're looking to try your hand at investing in the entertainment sector, you'd be hard-pressed to find another company with the long-term potential of Disney. Sure, it's a blue chip, so it won't be doubling anytime soon; but it pays a 1.2% dividend and boasts a deep bench of "cash-cow" caliber assets that any of its competitors would kill to have.

Arcos Dorados (NYSE:ARCO), despite two consecutive days of 6% sell-offs, also boasts an invaluable asset: it is the largest franchisee of McDonald's restaurants in the entire world. Arcos Dorados has a firm grip on the Latin American market, where it operates or franchises the McDonald's name in 20 countries and territories. The two-day slump, which sent the stock to 52-week lows, was triggered by a downgrade from JP Morgan, which reduced its price target from $14 to $11 per share. But before you go writing this company off, remember that analysts don't always have your best interests at heart, and then recall that JP Morgan became suddenly bullish on Arcos Dorados less than three months ago. 

I doubt a single analyst downgraded Netflix (NASDAQ:NFLX) stock today, as shares soared 16.5% on a blowout quarter and rosy talk about the company's future. The streaming entertainment giant hit all-time highs Thursday on the heels of its fourth quarter, which saw Netflix boost subscribers by 10%, or 4 million, in just three months. And Netflix certainly keeps its ear to the ground for game-changing technologies that could impact and grow its business. Just as it was a trailblazer in the streaming video segment, Netflix's VP of IT Operations, Mike Kail, spoke enthusiastically about an over-the-head, wearable LED device that could change the way people watch TV and movies in the coming years.

The smartphone war's best-kept secret... and who the real winner is
Netflix saw the potential in the mobile market and jumped on it; now much of its content is consumed on handheld devices, and its shareholders are beaming. Want to get in on the smartphone phenomenon? Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

Fool contributor John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends McDonald's, Netflix, and Walt Disney. The Motley Fool owns shares of Arcos Dorados, JPMorgan Chase, McDonald's, Netflix, and Walt Disney. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers