US government shutdown does not impact the markets | Calamatta Cuschieri

Markets update, new investments for Google and Facebook and Netflix subscribers keep on rising

Shares of Netflix jumped more than 8 percent after hours, pushing the market capitalization of the company above $100 billion for the first time
Shares of Netflix jumped more than 8 percent after hours, pushing the market capitalization of the company above $100 billion for the first time

Major stock market indexes finished at records Monday as the Senate approved a procedural bill that clears the way to ending a shutdown of the U.S. government. The S&P 500 rose 22.67 points, or 0.8%, to 2,832.97 with nine of its 11 main sectors ending higher, led by energy and telecommunication services. The Nasdaq Composite Index was up to 1%, at 7,408.03, on the back of strong biotechnology stocks and Dow Jones gained 142.88 points, or 0.6%. As some analysts said “Investors have learned from history that shutdowns don’t impact markets, so it’s not surprising to see stock prices higher”.

Google and Facebook unveil new investments in France

On Monday, Google unveiled its plan to open a new artificial intelligence centre in France within weeks. This will be its second centre in Europe after the one in Zurich. The efforts to increase the number of staff by 50% in Paris, will be extended until 2019.

This announcement came after the tech rival Facebook announced, on the same day, that it would invest €10 million in its French artificial intelligence centre over the next five years, doubling the number of AI scientists at its research base in Paris to 60 and increasing its funding of PhD candidates from 10 to 40.

Google also said that it would open four Google Hubs across the country, which will focus on free training in online skills and digital literacy. The first of these will be based in Rennes, Brittany and will be training more than 100,000 people each year.

The investments come at a time of growing momentum in France’s tech and start-up scene. President Macron has tried to attract the tech industry in order to reduce the unemployment rate that now is more than 9 percent.

On Monday, Google’s Mr Pichai and Sheryl Sandberg, Facebook’s chief operating officer, were among four top executives to have a one-on-one audience with Mr Macron.

The meeting at the World Economic Forum in Davos and under the slogan “Choose France”, was intended to promote France as an investment destination and explain the president’s pro-business reforms.

Netflix crosses $100 billion market capitalization as subscribers rise

Netflix shares jumped more than 8 percent after hours, pushing the market capitalization of the company above $100 billion for the first time.

After adding 8.33 million subscribers in the fourth quarter — the highest ever — the company expects its winning streak to continue. First-quarter earnings guidance was well above estimates.

Netflix plans to spend $7.5 billion to $8 billion on content in 2018 and CEO Reed Hastings expects content spending to be even higher in 2019 and 2020, as he said on a conference call with analysts.

Despite spending less than projected for the fourth quarter, Netflix said it expects negative free cash flow of $3 billion to $4 billion in 2018.  However, the company leaned on its solid track record, noting that it does eventually expect to become free-cash-flow positive.

Netflix remains the dominant over-the-top video provider. But Monday's earnings report comes amid challenges for the company.

On one hand, prices are going up while some of the company's content investments haven't gone as planned. The film "Bright," which the company touted as its "most ambitious film yet" in October, was panned by popular review sites.

At the same time, the prospect of more competition looms on the horizon. It's been nearly six months since Disney said it planned to pull its movies from Netflix in favor of its own service and buy Twenty-First Century Fox, a megadeal that would give the combined company a significant stake in Netflix's rival, Hulu.

Not only that, but Apple, Facebook, Amazon and Google's YouTube have doubled down on content.

Netflix shares are up more than 64 percent over the past year.

Disclaimer:

This article was issued by Linda De Luca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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