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Amidst Low Revenue, Wedbush Upgrades Netflix




A United States brokerage firm, Wedbush says it has upgraded a popular online streaming platform,  Netflix from Neutral to Outperform, despite the challenges of revenue and decline in subscribers facing the company.

Wedbush wrote on Monday that the streaming company “is positioned to grow,” citing the staggered releases of “Ozark” and “Stranger Things.”

Wedbush provides clients with a wide range of securities brokerage, wealth management, and investment banking services. 

Equity research analyst at Wedbush, Michael Pachter, doubled down on the streaming giant during an interview with Yahoo Finance Live.

“The stock was overvalued,” the analyst said, relating to its November 2021 peak of $690 a share. 

“This is not a dumb management team. They’re very smart, they have a ton of content, and they’ve made tens of billions of dollars of investment in content,” he further said.

Investors King gathered that Netflix lost 636,000 customers in the U.S. and Canada following a roughly 10 per cent price increase. That reflects a miss of around 750,000 subscribers (compared to the consensus forecast for a gain of 150,000.)

“I think the Street thinks they’re going to zero subscribers. They are not. “Netflix is going to always be the anchor subscription.”  Pachter stated.

According to Wedbush: “In our view, Netflix’s losses are primarily a result of its deep saturation in the U.S. and Canada, with other options being more attractive to new subscribers once it decided to raise price.”

However, new content rollouts could underscore the platform’s “commitment to reducing churn,” thus increasing subscriber growth and investor confidence.

Patcher said: “In our view, this experiment will be a resounding success if expanded to all Netflix originals, and we believe the company will ultimately move in that direction.”

Overall, Wedbush describes Netflix as an “immensely profitable, slow-growth company.” The firm suggested that it should raise prices in its more mature markets (U.S, Canada) in order to increase profitability to reinvest in newer markets like Latin America and Asia. 

Meanwhile, the online streaming platform has laid off 150 of its employees as its subscriber base and revenue slows down. This is coming less than a month after it disengaged at least 10 full-time staff and contractors in its editorial and marketing divisions.

On Tuesday, Netflix confirmed to Yahoo Finance that it will be laying off about 150 positions of the streamer’s 11,000 workforce in an effort to reduce spending and offset slowing revenue growth.

The sacked workers represent two percent of its workforce, largely in the U.S. The company is also eliminating 70 roles from its animation unit, as well as roles for social media and publishing contractors. 

“As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company. So sadly, we are letting around 150 employees go today, mostly US-based,” a Netflix spokesperson said in a statement.

“These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues. We’re working hard to support them through this very difficult transition”, he added.

Investors King reports that Netflix’s unexpected decline in Q1 subscribers led to a stock plummet of 35 per cent and wiped more than $50bn off its market cap.

Since then, the stock has struggled to rebound, down more than 68 per cent year-to-date as investors question the longevity of the Netflix business model amid high inflation and increased competition.

To mitigate the impact of the low revenue, number of subscribers, Netflix will introduce an ad-supported subscription option and cut down on spending.

Coupled with layoffs, Netflix’s upcoming ad-supported offering, in addition to its crackdown on password sharing, should also help alleviate monetary pressures, with “great potential to drive significant revenue,” according to Wedbush.

“On balance, we think ad-supported subscriptions is a good idea, particularly as a disincentive to churn,” the note read.

As competition in the space intensifies, Patcher said it’s important to remember Netflix’s identity within the streaming wars.

Patcher noted that Netflix consumption is something north of 30 hours a month, adding that “quantity is important”.

“Nobody goes into Walmart expecting to buy premium brands and spend a ton of money. They go in for quantity. That’s what Netflix is. They’re the Walmart of streaming video, and they’ve got everything,” he said.

Company News

Dangote Petroleum Refinery Set to Make History with Public Listing on NGX



Dangote refinery

Aliko Dangote, the president and chief executive of Dangote Industries Limited, has announced plans to publicly list the subsidiary, Dangote Petroleum Refinery, on the Nigerian Exchange Limited (NGX).

Dangote expressed confidence in overcoming previous challenges related to crude oil supply, stating, “We have resolved all the issues with crude oil supply. We are now ready to move forward with our plans to list the refinery on the Nigerian Exchange Limited.”

The refinery, poised to commence operations in December, holds the promise of significant contributions to the Nigerian economy.

At full capacity, it is expected to produce 650,000 barrels of oil per day, with an initial rollout of 540,000 barrels daily.

The facility will produce 27 million liters of diesel, 11 million liters of kerosene, and nine million liters of jet fuel, sourcing crude from various Nigerian producers, including the state oil company.

A finalized deal for the delivery of the first cargo of approximately six million barrels next month signals the imminent realization of this ambitious project.

The refinery’s impact is anticipated to extend beyond the oil and gas sector, with projections suggesting significant cost savings for Nigeria by eliminating the need to import petrol.

Industry operators and government officials are optimistic about the transformative potential of the Dangote Refinery.

Akinwumi Adesina, President of the African Development Bank (AfDB), lauded the project as the best-industrialized initiative for Africa, projecting substantial savings for Nigeria and the continent as a whole.

As Nigeria’s largest refinery project, the facility has garnered praise from the Lagos Chamber of Commerce and Industry (LCCI).

Dr. Chinyere Almona, the LCCI Director-General, commended the visionary efforts of Aliko Dangote and the supportive federal government, emphasizing the refinery’s capacity to meet Nigeria’s refined petroleum product needs.

The impending listing on the NGX positions Dangote Petroleum Refinery as a catalyst for economic growth, energy security, and self-sufficiency in Nigeria and beyond.

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Company News

Aliko Dangote: Dangote Refinery Set to Commence Operations, Eyes 350,000 Barrels Daily



Dangote and Akinwumi

In a recent interview with the Financial Times, Aliko Dangote, the President and CEO of the Dangote Group, announced that the long-anticipated $20 billion Dangote Refinery in Lekki, Lagos, is set to commence operations by refining 350,000 barrels per day.

Dangote revealed that a deal had been secured for the delivery of the first cargo of approximately 6 million barrels in December 2023.

He expressed confidence that the refinery could achieve its full capacity of 650,000 barrels per day by the end of 2024.

The Dangote Refinery, touted as the world’s largest “single train” facility with a singular distillation unit, is expected to significantly reduce Nigeria’s dependence on imported fuel and save billions in foreign exchange.

Dangote lamented the irony that Nigeria, a major oil producer for over 50 years, has struggled to refine its own crude adequately.

However, the project, which has faced delays and exceeded its budget by about $8 billion, has not been without challenges.

Dangote dismissed doubts about the refinery’s efficiency, stating that the challenges encountered during the project could have jeopardized his business empire.

He acknowledged being under intense pressure, facing allegations of underhand business practices and gaining unfair access to foreign exchange, which he vehemently denied.

Despite these challenges, Dangote expressed gratitude for overcoming the hurdles and reaching the destination.

The refinery is expected to generate substantial revenue, and plans are underway to eventually list it as a separate company on the Lagos stock exchange.

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Company News

Dangote Cement Advocates for Sustainable Cement Production Amid Rising Carbon Emissions



Dangote Cement - Investors King

In a bid to address the escalating global concerns over carbon emissions, Arvind Pathak, the Group Managing Director of Dangote Cement Plc, highlighted the cement industry’s pivotal role in contributing to seven per cent of worldwide carbon emissions.

Speaking at the 12th Africa Cement Trade Summit in Abidjan, Cote d’Ivoire, Pathak emphasized the necessity for the industry to adopt sustainable practices.

Pathak acknowledged the energy-intensive nature of cement production, outlining the emissions generated throughout the value chain, from raw materials’ processing to the final product’s dispatch.

Dangote Cement, a significant player in the industry, has committed to decreasing carbon emissions through a strategic fuel substitution approach.

Pathak, represented by the Group’s Head of Sustainability, Dr Igazeuma Okoroba, advocated for the use of alternative fuels, such as municipal, agricultural, and industrial wastes, to reduce emissions.

He emphasized that these alternative fuels emit less CO2 when combusted, contributing to a more sustainable and environmentally friendly cement production process.

Despite the challenges posed by global climate shocks, Pathak stressed that decarbonization is not merely an option but a necessary strategy for future-proofing businesses.

Dangote Cement, as a pioneer in decreasing CO2 emissions, has leveraged sustainability reporting and received positive ratings for its climate change initiatives.

The adoption of alternative fuels aligns with the broader goal of addressing climate change concerns and reducing the cement industry’s environmental impact.

Pathak highlighted the need for clear and detailed decarbonization targets, emphasizing that companies must adapt to a rapidly changing world by embracing sustainable practices.

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