Activision Blizzard, American Airlines, Netflix, and US Banks: Weekly News Digest (17 - 21 January)
On the menu today: the details of the widely discussed contract between Microsoft and Activision Blizzard; the quarterly reports of Goldman Sachs, Bank of America, Morgan Stanley, American Airlines, Netflix; and the reaction of their stock prices to the data.
Microsoft plans to buy Activision Blizzard for almost $70 billion
At the beginning of the week, both companies announced they were preparing for the acquisition. Microsoft is ready to pay $95 per Activision Blizzard share. This is 45% more than the closing price of the game developer's stock on Friday 14 January 2022. The contract amounts to $68.7 billion. If everything goes smoothly, Microsoft will join Tencent and Sony on the list of the three largest game companies in the world. The board of directors of both parties has already approved the agreement and hopes to be granted permission from the anti-monopoly authorities of the US, Europe, and China this year.
The reaction of the shares of Activision Blizzard, Microsoft, and Sony
On 18 January 2022, the share price of Activision Blizzard Inc. (NASDAQ: ATVI) leaped up 25.88% to $82.31. The high of that trading day was $86.9.
As for Microsoft investors, they have never reacted so vividly to the news about the largest contract in the history of the company. On Tuesday, the price of Microsoft Corporation (NASDAQ: MSFT) stock dropped 2.43% to $302.65.
Following the news about the acquisition, the stock of Sony Group Corp. (NYSE: SONY) – the main rival of Microsoft in the market of game consoles – kept falling for two sessions in a row. As a result, it lost 11.82%, reaching $110.04.
Quarterly reports of Goldman Sachs, Bank of America, and Morgan Stanley
This week, large American banks such as Goldman Sachs, Bank of America, and Morgan Stanley, reported their Q4 2021 performance. Not all statistics for October-December were satisfactory.
Important report details
|Goldman Sachs||Bank of America||Morgan Stanley|
|Revenue||$12.64 billion (+8%)||$22.06 billion (+10%)||$14.52 billion (+7%)|
|Forecast revenue||$12.08 billion||$22.17 billion||$14.57 billion|
|EPS||$10.81 (-11%)||$0.82 (+39%)||$2.01 (+11%)|
|Net profit||$3.94 billion (-13%)||$7 billion (+27%)||$369 billion (+9%)|
The reaction of the banks’ stock to the Q4 2021 performance reports
On 18 January 2022, the shares of Goldman Sachs Group Inc. (NYSE: GS) dropped 6.97% to $354.4. The decline had begun one day before the statistics were released. The stock price continued to fall for three sessions in a row because the bank's performance did not meet analysts' expectations. Consequently, Goldman Sachs Group Inc.'s stock lost 11% in total.
On 19 January 2022, the share price of Morgan Stanley (NYSE: MS) and Bank of America Corp. (NYSE: BAC) grew 1.83% to $95.73 and 0.39% to $46.44, respectively. Investors were positive about the growth of the quarterly revenue and profit of these banks.
American Airlines report: quarterly loss shrinks by 60%
On 20 January 2022, American Airlines reported its Q4 2021 results. The key takeaway was the decrease in the quarterly loss from $2.18 billion to $0.93 billion.
In October-December, American Airlines' revenue from passenger flights surged 162.7% to $3.38 billion, compared to the statistics of Q4 2020. Cargo transportation yielded $341 million, growing 19.7%.
- Revenue - $9.43 billion, +134%, forecast - $9.34 billion
- Loss per share - $1.44, -62%, forecast - $1.56
- Net loss - $931 million, -57%
What is happening with American Airlines stock?
Following the publishing of the Q4 2021 report, American Airlines Group (NASDAQ: AAL) stock dropped 3.18% to $16.76. The shares had been declining for four consecutive days – 13.4% totally. As for the yearly result, American Airlines Group stock went up 13.9% in 2021.
Netflix report: slowing growth in the number of subscribers
On 20 January 2022, American streaming company Netflix presented its Q4 2021 report. In October-December 2021, the number of subscribers to the platform increased by 8.3 million users. Compared to the statistics of Q4 2020, this translates into 2.5% growth. The overall number of paid Netflix subscribers has reached 221 million.
Netflix forecasts that in Q1 2022 its subscribers will increase by 2.5 million users. Compared with the same months of 2021, the number of Netflix users has increased by 4 million. Analysts had expected more prominent growth this quarter – by 6.93 million users.
- Revenue - $7.7 billion, +16%, forecast - $7.7 billion
- EPS - $1.33, +11.8%, forecast - $0.83
- Net profit - $607 million, +12%
Netflix’ reaction to the slowdown of its subscriber growth
On 20 January 2022, following the publishing of the Q4 2021 report and the forecast for the current quarter, the share price of Netflix Inc. (NASDAQ: NFLX) closed with a 1.48% decline to $508.25.
At the postmarket, Netflix stock fell 19%. Netflix shares saw 11.4% growth in 2021 but since the beginning of 2022, they lost 15.6%.
Microsoft plans to acquire Activision Blizzard for $68.7 billion. The shares of the first company reacted with a minor decline, while the stock of the second one leaped up almost 26%.
Goldman Sachs, Bank of America, and Morgan Stanley reported their Q4 2021 performance. The stock of the first bank dropped 7%, while the shares of the second and third ones saw 2% and 0.5% growth, respectively.
American Airlines reported a 60% decrease in the quarterly net loss, and the shares of the company dropped 3%.
Netflix published statistics for October-December 2021, reporting slowing growth in the number of subscribers. At the postmarket, the shares of the platform reacted with a 19% decline.