Thursday's Headlines: Netflix Grants Rating Agencies a Look Under the Hood

Thursday's Headlines: Netflix Grants Rating Agencies a Look Under the Hood

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

ShotSpotter (SSTI) +11.4%

Farfetch (FTCH) +9.5%

Upstart Holdings (UPST) +6.0%

Airbnb (ABNB) +5.2%

Block (SQ) +5.0%

Moving Down ⬇️

Coupa Software (COUP) -3.3%

Arista Networks (ANET) -3.2%

FactSet (FDS) -3.1%

American Tower (AMT) -2.9%

Peloton Interactive (PTON) -2.8%

Here are the stories that you need to know ahead of market-open today, Thursday the 13th of October.

Netflix Grants Rating Agencies a Look Under the Hood 📺

Netflix (NFLX) announced that it will allow its viewing data to be measured by an outside agency as the streamer prepares for its new ad-supported tier. BARB (Broadcasters' Audience Research Board), a UK-based firm that currently measures the audience and ratings of hundreds of broadcast channels including the BBC and ITV, has secured the contract.

This marks the first time Netflix has allowed an external agency access to such sensitive information and is a step in the right direction for viewership transparency. In the past, the streamer and all of its competitors have only released flashy snapshots to the public, making it difficult to determine the performance of its B-list programming.

Subscribers to BARB’s platform will be able to view Netflix’s viewership data starting on November 2. Coincidentally, this corresponds with the release of season five of ‘The Crown’, one of Netflix’s hottest original programs. It is still unclear when and if Netflix will appear on BARB’s Advanced Campaign Hub, where advertisers buy and sell ad slots.

The announcement comes on the heels of a lawsuit filed against Warner Bros. Discovery for “overstating the number of subscribers to HBO Max by as many as 10 million.” The suit was brought by shareholders in the wake of Warner Bros. and Discovery’s merger and debut on public markets.

Clearly, shareholders, creators, and advertisers could all benefit from streamers allowing their data to be externally verified. It is rumored Disney has also signed a contract with BARB but declined to publicize the news. Time will tell if other players follow Netflix and Disney’s lead.

TSMC the Latest Chipmaker to Feel the Pinch 🤏

Taiwan Semiconductor Manufacturing Co., better known as TMSC, is the latest chipmaker to come under pressure as a drop in demand, combined with recent legislation, is wreaking havoc on the industry. The world's largest semiconductor company slashed its capital expenditure guidance by 10%, suggesting the chip giant foresees a broader downturn ahead.

The Biden administration’s aggressive legislation limiting the sale of semiconductors to China in an attempt to curb the development of threatening technologies will significantly impact TSMC. Analysts estimate that it could affect up to 10% of sales. CEO C.C. Wei said it’s “too early to provide a specific number, however the inventory correction will likely see its biggest impact sometime in the first half of 2023”. He would go on to say that the cuts felt from the legislation would be manageable, however.

It is not just legal restrictions that are affecting the industry, though. As the world’s largest contract chipmaker, TSMC produces semiconductors for the likes of Nvidia, Qualcomm, and Apple. With demand for electronics seeing a sharp dip in recent times, it will likely see a further pullback ahead. This is not helped by the fact that Apple, its largest customer, recently decided to abandon plans for increased production of the iPhone 14 after initial sales disappointed.

TSMC is down almost 40% year-to-date.

Duck Creek Technologies Spreads Its Wings 🦆

Shares in insurtech software developer Duck Creek Technologies are soaring premarket following its fiscal fourth quarter 2022 earnings report yesterday evening. The Boston-based company beat analysts’ expectations for both earnings and revenue, but underwhelmed when it came to Q1 guidance. Nevertheless, shares in Duck Creek are currently up close to 9% in premarket trading.

Duck Creek Technologies reported earnings per share (EPS) of $0.03 on revenue of $80.7 million, beating out respective analyst marks of $0.02 and $73.08 million. CEO Michael Jackowski stated that:

“Duck Creek’s fourth quarter performance was highlighted by improved deal activity as customer demand and interest in modernizing their core systems to Duck Creek OnDemand, our industry-leading SaaS cloud platform, remained strong.”

Despite these stellar results, the firm's Q1 guidance did leave a bit to be desired, with an estimated loss of $0.01 at the low end and a revenue estimate of $75.5 million both lower than consensus analyst figures. However, CFO Kevin Rhodes was quick to point out that the company takes a “prudent approach to forecasting deal close rates” and that investors should keep in mind that “the first quarter is typically our lowest bookings quarter.”

Duck Creek Technologies is a software-as-a-service (SaaS) company that specializes in the world of insurance. It provides a range of services, including a platform for launching new insurance products, payment and invoicing capabilities, and a dedicated claims platform among a host of others. The company was founded in Boston in 2016 and went public in August 2020.

It enjoyed a general period of slow growth up until late 2021 before suffering a similar fate to many smaller tech companies and losing significant value. It now sits over 81% off all-time highs witnessed in early 2021 and is currently down close to 65% year-to-date prior to this morning's timely premarket boost.

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