Apple’s and Netflix’s Latest Moves

Both tech behemoth Apple and streaming leader Netflix, grabbed the spotlight on Monday, December 18, with significant developments impacting their stock performances.

Here’s what you need to know about the latest updates from these two industry giants:

Apple’s Stock Slip 

On Monday, December 18, Apple (AAPL) experienced a 1% decline following an announcement that it will halt sales of specific Apple Watch models; namely, the Apple Watch Series 9 and the Apple Watch Ultra 2. 

This decision is set to take effect in the coming days. As part of this pause, Apple will remove these particular watch models from its online stores by the afternoon of December 21 and by December 24 from its physical stores.

The less-than-rosy decision seems to be the result of the International Trade Commission's (ITC) granting Masimo (MASI), a medical device maker, a cease-and-desist of Apple’s said products.

The order emerged in light of an intellectual property dispute between Apple and Masimo over the watch’s Blood Oxygen feature, resulting in ITC's ban of watches that use this feature. The ban also includes a halt on the importation of these watches in the US.

Given the fact that Apple Watches are considered one of the company’s “most successful accessories,” it makes sense to learn that “Apple strongly disagrees with the order and is pursuing a range of legal and technical options to ensure that Apple Watch is available to customers.” 

Nonetheless, despite these news and the drop in Apple’s share price, according to the company, customers who already purchased the watches in question will not be affected and the model’s availability in other countries (besides the US) will also not be impacted. (Source: CNBC)

China’s Apple Ban Continues 

In addition to the previously mentioned challenges, it's crucial to note that China, the world's second-largest economy, maintains its ban on Apple Phone sales, reflecting the country's efforts to reduce its dependence on US technology. 

Notably, China has extended restrictions beyond sales, advising government employees and certain state-owned enterprises to refrain from using foreign devices, including iPhones, at work. In addition, Chinese state-owned businesses are also reinforcing this policy, urging employees to exclusively utilize domestic devices, continuing a measure initiated back in September. 

Given that China constitutes one-fifth of Apple's revenue and plays a significant role in its manufacturing, traders and analysts alike may want to monitor developments from China for potential impacts on Apple's stock performance as we approach the end of the year.

Nonetheless, in spite of these challenges, since the beginning of 2023, Apple has actually managed to gain over 56%. 

Netflix Soars on Morgan Stanely’s Updated Price Target

On Monday, December 18, Netflix (NFLX) soared by over 3% following big bank Morgan Stanley’s (MS) updated price target. 

Whereby the bank’s price target for Netflix stood at $475 per share, it now stands at $550 per share. This upward adjustment reflects the bank's optimistic outlook on various aspects of Netflix's performance, such as its anticipated returns on content spending, successful execution of growth initiatives, including paid sharing and advertising, and a drop in competitive pressure in the media field.

In addition, the bank also revealed that Netflix has initiated a strategy of hedging currency risks, which, according to Morgan Stanley, may boost the former’s earnings. Still, only time will tell if Netflix could live up to its price target.

Netflix’s Viewership Report

Another interesting piece of news to keep in mind is Netflix’s updated Viewership Report, as it marks “a significant step toward greater transparency for a company that has historically kept audience figures off limits to the public.”

The Viewership Report encompasses six months of data about hours spent viewing each title (both original and licensed) and provides insights from over 50,000 hours of viewership, offering an overview of the audience’s engagement with various content. It also includes over 18,000 titles, which is about 100 billion viewing hours.

This release signifies an important milestone for Netflix, especially considering that many of its competitors aren’t as transparent about such reports.

Furthermore, the report can be leveraged to understand Netflix’s business model, as it revealed the company’s most successful and less successful territories, demonstrating that licensed content (such as “Suits”) comprised a significant portion of the viewing hours.

The top 10 shows on Netflix were also announced, with 9 out of 10 being Netflix originals. Notably, shows like “The Night Agent” and “Ginny and Georgia” made the cut.

All in all, despite having had a volatile year, since the start of 2023 Netflix gained almost 65%. 

Conclusion

This Monday, both Netflix and Apple made the headlines as Apple’s share dropped and Netflix’s share rose.

While Apple experienced setbacks from China and Masimo bans, Netflix revealed its rosy Viewership Report as Morgan Stanely upped the streaming giant’s price target.