Raphael Stevens

Netflix only lost around 970,000 subscribers during the second quarter, a smaller loss than the 2 million it had projected last quarter.
The company aims to unveil its lower-cost, ad-supported tier in early 2023.
The streaming giant provided guidance for the third quarter, saying it expects to add around 1 million net new subscribers.

Netflix shares jumped after the company said it lost fewer subscribers than anticipated during the second quarter.
The streamer also said it aimed to unveil its lower-cost, ad-supported tier in early 2023. This comes on the heels of Netflix tapping Microsoft to be its partner on the ad-supported offering.

“We’ll likely start in a handful of markets where advertising spend is significant,” the company said in its shareholder letter. “Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So, our advertising business in a few years will likely look quite different than what it looks like on day one.”
Netflix had warned investors last quarter that it expected to shed around 2 million subscribers, but only lost around 970,000 during the three month period ending June 30.
Here are the results:

EPS: $3.20 vs $2.94 per share, according to Refinitiv.
Revenue: $7.97 billion, vs. $8.035 billion, according to Refinitiv survey.
Global paid net subscribers: A loss of 970,000 subscribers vs. expectations of a loss of 2 million, according to StreetAccount estimates.

The company, which currently has 220.67 million subscribers, said it expects net adds to reach 1 million in the third quarter, reversing some losses seen during the first half of the year. Analysts had predicted Netflix would guide for growth of around 1.8 million.
Netflix also noted that it is in the early stages of its paid sharing plan. This is an effort it mentioned last quarter that would upcharge some members for sharing their subscription with family members or friends that live outside their home. The company said it is looking at two different approaches in test cases in Latin American that can inform a wider rollout in 2023.

The company warned of the strengthening U.S. dollar’s impact on its international revenue, which makes up 60% of its top line. The dollar’s surge comes as the Federal Reserve hikes interest rates to fight four-decade-high inflation in the United States.
Last quarter, Netflix addressed its slowing revenue growth, which it said was the result of competition, account sharing and other factors such as sluggish economic growth and the war in Ukraine.
“We’ve now had more time to understand these issues, as well as how best to address them,” the company said.
It remains focused on content, offering big-budget films on its service rather than in theaters, and providing all episodes of new shows all at once for subscribers to binge. The company touted “Stranger Things” season four as a big win for the brand. Not only did it top viewership records for the company, but it was also nominated for several 2022 Emmys.
Netflix’s shares, which traded around $700 last year, closed Tuesday at just above $200.

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With increased fears of a possible recession, investors seeking steady income may turn to stocks paying quarterly dividends.
While dividends may be appealing during a flat or down market, it’s important to assess the company before buying.
“People sometimes chase dividends, and they don’t understand the risks,” said Scott Bishop, executive director of wealth solutions at Avidian Wealth Solutions in Houston.

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With increased fears of a possible recession, investors seeking steady income may turn to stocks paying quarterly dividends, which are part of company profits sent back to investors.
Historically, dividends have significantly contributed to an asset’s total return, sometimes providing a boost during economic downturns.

From 1973 to 2021, companies paying dividends earned a 9.6% total annual return, on average, beating 8.2% from the S&P 500 Index, and eclipsing the 4.79% yield from non-dividend payers, according to a 2022 Hartford Funds study.
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Dividends have investors’ attention: Dividend funds have added $43 billion in 2022 as of late June, according to SPDR Americas research.
Still, investors need to scrutinize their picks before adding dividend payers into their portfolios.
“People sometimes chase dividends, and they don’t understand the risks,” said certified financial planner Scott Bishop, executive director of wealth solutions at Avidian Wealth Solutions in Houston.

Here’s what to know.

Why dividends are attractive in tough economic times

“Dividend-paying companies are typically going to have higher levels of free cash flow,” said Dave Sekera, chief U.S. market strategist at Morningstar. And they may be valued more modestly, he said.
“Both of those have definitely been attractive for investors this year as we see the economy softening, interest rates rising and inflation still running hot,” Sekera said.
Dividend payers tend to be large, mature companies, producing products and services still needed during a recession, explained Kashif Ahmed, a CFP and president at American Private Wealth in Bedford, Massachusetts.  

“Nobody needs a Rolex every day, but we all need toilet paper,” he said.
Some companies, known as the “dividend aristocrats,” have a history of increasing dividends annually, even during previous recessions. And many companies are slow to cut dividends, providing some investors with reliable cash flow.

Be critical when chasing high dividend yields

While a higher dividend payout may be appealing during a flat or down market, it’s important to assess what you’re buying before adding new assets to your portfolio. As Bishop pointed out, there can be risks.
There are two parts to a company’s dividend yield: the annual dividend per share and the current share price, Bishop explained. If the dividend yield is far above similar companies, the stock price may have dropped for various reasons.

People sometimes chase dividends, and they don’t understand the risks.

Scott Bishop
Executive director of wealth solutions of Avidian Wealth Solutions

“You shouldn’t just look at dividend yield,” Bishop said, explaining why it’s essential to understand the financials of the company.
And for those unwilling to analyze each company, dividend-paying funds may offer more diversification than individual stocks.

Keep dividend payers in tax-friendly accounts

Whether you receive income from stocks or bonds, you’ll need to be strategic with what kind of account you use to hold those assets, Ahmed explained, especially if you’re an investor in a higher tax bracket.
Generally, it’s better to keep income-producing assets, such as dividend-paying stocks, mutual funds with annual payouts or bond coupons, in tax-friendly accounts, like a 401(k) or individual retirement account, he said. Otherwise, you may owe yearly taxes on capital gains.

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Netflix investors were warned by the streaming giant that subscriber losses could amount to about 2 million during the second quarter.
The question remains how Netflix will guide for the second half of the year.
The company is working on a cheaper, ad-supported plan that could aid in boosting sub numbers alongside a packed slate of content.

In this photo illustration the Netflix logo seen displayed on a smartphone screen, with graphic representation of the stock market in the background.
Sopa Images | Lightrocket | Getty Images

Netflix investors already know to expect bad news when the company reports its second-quarter results Tuesday. Now they’ll be looking for guidance on what to expect for the second half of the year.
The streaming service’s executives warned in April that subscriber losses could amount to about 2 million during the second quarter, after slipping by 200,000 during the first three months of the year. At the time, Netflix blamed factors including intensifying competition, password sharing and inflation for the slip in subscribers.

When Netflix reports after the bell on Tuesday, another forecast of subscriber losses for the third and fourth quarters could send the company’s stock spiraling.
Ahead of earnings, analysts on average are forecasting 1.8 million net new subscriber additions during the third quarter, according to Street Account. The company declined to provide full-year guidance last quarter, but noted that it has a stronger slate of content releases for the back half of 2022. It also said that price increases, which may have led some customers to leave earlier this year, would be less of a churn factor.
The company has around 222 million subscribers globally.

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As for the second quarter, analysts are split on whether subscriber losses will be better or worse than Netflix predicted. Some expect the company to lose as many as 4 million subscribers, while others foresee a loss of 1.5 million.
“I do think the 2 million is conservative,” said Michael Pachter, analyst at Wedbush. “I know they try to be conservative, and generally don’t miss by much, so if it’s worse, I’d be surprised.”
Pachter and other analysts who expect smaller subscriber losses have pointed to the streaming service’s popular series “Stranger Things.” The fourth season of the show was released in two parts, one at the end of the second quarter and one at the beginning of the third. Some analysts expect the split may have limited churn or even driven new subscribers to sign up or to return.
“The sooner Netflix can show Wall Street they are releasing new content across multiple quarters, like they did with ‘Stranger Things’ Season 4, and highlight the efforts they are making to reduce churn, we will see more interest from investors looking at the possibility for net new subscribers,” said Dan Rayburn, a media and streaming analyst.
A cheaper ad-supported subscription plan is also in the works and could lure back lapsed customers or encourage new users. No date has been set for the rollout of the option, but more information about its development Tuesday could boost investor confidence. Netflix’s standard plan in the U.S. costs $15.49 a month, making it pricier than other major streaming services.
Netflix also has plenty of titles arriving before year-end that could attract subscribers. In the third quarter, subscribers will have access to the big budget action movie “The Gray Man,” the first season of “Sandman,” Jamie Foxx’s vampire flick “Day Shift,” as well as a comedy called “Me Time” starring Mark Wahlberg and Kevin Hart.
Also on the way are the fifth season of “Cobra Kai,” several romantic comedies and some children’s titles including “My Little Pony: Make Your Mark” and Roald Dahl’s “Matilda: The Musical.”
“I expect they will guide to a gain in Q3,” Pachter said. “The consensus is 1.81 million new subscribers for Q3, notwithstanding the fact that half of the analysts covering downgraded the stock. Most are hedging their bets, and I think a guide to a return to subscriber growth will be positively received.

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Spirit Airlines plans to open a crew base at George Bush Intercontinental Airport in Houston.
The carrier will have 150 pilots and 300 flight attendants based in Houston.
In March Spirit announced crew bases in American Airlines hub Miami and at Delta Air Lines-dominated Atlanta.

A Spirit Airlines aircraft takes off at La Guardia Airport.
John Nacion | LightRocket | Getty Images

Spirit Airlines said Tuesday it plans to open a crew base at George Bush Intercontinental Airport in Houston, a United Airlines hub, the latest expansion as the discounter plots growth at large airports.
Miramar, Florida-based Spirit in March announced crew bases at Delta Air Lines-dominated Hartsfield-Jackson Atlanta Airport and American Airlines hub Miami International Airport.

Spirit says it plans to have 150 pilots and 300 flight attendants based in Houston, starting this fall. The carrier and its rivals have been scrambling to staff up to meet strong travel demand and improve reliability. Last summer, Spirit said thousands of flight cancellations over a 10-day stretch cost it about $50 million.
Establishing a crew base in Houston, where it currently averages 22 departures a day, would mean staff who live in the area wouldn’t have to commute from another city, a common practice in aviation.
Spirit said it would open a maintenance facility in Houston. It already has a maintenance facility in Detroit. The carrier is scheduled to end 2022 with a fleet of 197 Airbus narrow-body jets, after getting 24 new planes this year.
The new base comes amid a bidding war for Spirit. Fellow budget carrier Frontier Airlines and Spirit announced plans to merge in February, but JetBlue Airways swooped in with a rival all-cash takeover bid in April.
While Spirit repeatedly rebuffed JetBlue, the airline has struggled to gain shareholder support for the Frontier combination, according to Frontier, and has postponed an investor vote on that deal four times to continue talks with both carriers, a sign that the Spirit-Frontier deal is under threat. It most recently scheduled a vote for July 27.

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Britain recorded its hottest-ever day Tuesday, with temperatures hitting a high of 40.2 degrees Celsius (104.4 degrees Fahrenheit) in south England, according to provisional data from the Met Office.
Temperatures are forecast to surpass 42 degrees Celsius (107.6 degrees Fahrenheit) in parts of England by the afternoon.
Millions of Brits endured the country’s hottest-ever night Monday, with temperatures remaining above 25C in places.

People turn out to watch the sunrise at Cullercoats Bay, North Tyneside. Britons are set to melt on the hottest UK day on record as temperatures are predicted to hit 40C. Picture date: Tuesday July 19, 2022.
Owen Humphreys | Pa Images | Getty Images

LONDON — Britain recorded its hottest-ever day Tuesday, with temperatures hitting a high of 40.2 degrees Celsius (104.4 degrees Fahrenheit) in south England, according to provisional data from the Met Office.
The figures from the U.K.’s weather service showed Heathrow, near London, hit the new high Tuesday, surpassing the record of 39.1C set earlier in the day. A previous high of 38.7C was recorded in 2019.

It comes as Brits face the second day of an extreme heatwave, which is causing widespread disruption and raising the risk of wildfires.
“If confirmed this will be the highest temperature ever recorded in the UK. Temperatures are likely to rise further through today,” the Met Office said on Twitter.
Temperatures are forecast to hit as high as 42C in parts of England by Tuesday afternoon, according to the Met Office, which issued a red extreme heat warning. Health authorities urged people to take precautions, including staying indoors and drinking plenty of water.
The country is also on high alert for wildfires, with the southeast of England at “very extreme danger,” according to the European Forest Fire Information System.
It comes as many parts of Europe and North Africa are also currently experiencing extreme temperatures, with wildfires breaking out in France, Spain, Portugal, Greece and Morocco.

Brits endure hottest-ever night

Millions of Brits endured the country’s hottest-ever night Monday, with temperatures remaining above 25C in places, surpassing the previous nightly record of 23.9C recorded in Brighton in 1990.
It followed a day of extreme heat Monday, during which a high of 38.1C was reached in Suffolk in the east of England — falling just short of the U.K. record.
The high temperatures have been particularly disruptive for a country with little infrastructure or conveniences like air conditioning to cope with hot weather.

The U.K.’s Met Office has said extreme temperatures in the country have been made 10 times more likely by climate change.
Anadolu Agency | Anadolu Agency | Getty Images

Emergency services were on high alert across the country as they faced a surge in weather-related incidents, with several fatalities already reported.
A number of schools closed early Monday, or didn’t open at all, despite government advice to remain open.
Meanwhile, water companies in the south of England reported an “extraordinary” surge in demand due to the weather, which they said could result in low pressure or even interrupted supply.

Infrastructure struggles under the heat

The soaring temperatures also led to travel chaos for commuters and holidaymakers as hundreds of services were halted.
Runways at both London’s Luton Airport and RAF Brize Norton in Oxfordshire were impacted by the heat, causing aircraft to be diverted and flights canceled.
Meanwhile, rail services were heavily affected, with buckled rails reported and overhead wire systems failing. In some areas, cancellations and speed limits of 20 miles per hour were imposed.
Britain’s Transport secretary, Grant Shapps, told the BBC that the country’s rail network could not handle the intense heat, adding that upgrades to help services cope with extreme temperatures would take “many years.”

“Closed 19th Due to the Heatwave” is written on a notice hanging on a closed store. In the London region, the temperature could rise up to 40 degrees.
Sebastian Gollnow | Picture Alliance | Getty Images

“We are building new specifications, creating overhead lines that can withstand higher temperatures. But with the best will in the world, this is infrastructure which has taken decades to build, with some of our railways stretching back 200 years,” he told the BBC on Tuesday.
It comes as heatwaves grow more common and severe because of human-induced climate change. Indeed, the U.K.’s Met Office has said extreme temperatures in the country have been made 10 times more likely by climate change.
Average world temperatures have risen by just over 1C from their pre-industrial levels, and are set to climb by 2.4C to 4C by the end of the century, depending on global efforts to cut CO2 emissions.
Greg Dewerpe, founder and chief investment officer at venture capital firm A/O PropTech, told CNBC on Tuesday that as much as $10 trillion per year needs to be invested in buildings and infrastructure between now and 2050 to help countries deal better with the new climate realities.
“If you look at the built world overall, there is about $10 trillion a year that needs to be invested in retrofitting technologies for housing, for offices, for all sorts of buildings around us, by 2050,” he said.
“Technologies that are going to enable us to transition in terms of decarbonization and resiliency are key,” Dewerpe added.

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