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“Netflix Shatters Records with Skyrocketing Subscriber Numbers, Leaving OpenAI CEO on Edge”

by Tech Desk
2 minutes read
“Netflix Shatters Records with Skyrocketing Subscriber Numbers, Leaving OpenAI CEO on Edge”

This week in tech, there were several major headlines that caught the attention of investors and industry experts. Let’s take a closer look at some of these stories and what they could mean for the companies involved.

First up, Netflix announced that its new $7 per month ad-supported tier has reached nearly 5 million active users per month. This is a significant increase compared to the ~1 million reported by third parties. The company also said that ads now account for 25% of new subscribers in respective geographies, and viewers are four times more likely to engage with an ad on Netflix than on other streaming platforms. Analysts were positive about this news, with Oppenheimer applauding the “ad tier progress” and Evercore reiterating its outperform rating as new updates show the ad tier is “steadily gaining ground.” As a result, Netflix shares rose 7.2% for the week to $365.36.

Tesla’s Elon Musk made headlines during the company’s annual shareholder meeting when he appeared to decide in real-time to try advertising his vehicles after years of resisting the idea. In response to an investor’s question about a possible ad campaign, Musk said Tesla will try “a little bit of advertising.” Wedbush sees this as a major positive for Tesla since many parts of Tesla’s product portfolio are undervalued on Wall Street and unknown by much of the general public who don’t know about TSLA products’ affordability and capabilities. As a result, Tesla shares gained 7.5% over the week to $180.14.

Western Digital (WDC) and Kioxia Holdings Corp are accelerating merger talks amid weak demand for memory products that have hit both companies hard due to excess inventory. The merged entity would be owned 43% by Kioxia, 37% by Western Digital, and the rest by current shareholders from both companies; this deal structure is currently being discussed. Benchmark reiterated a Hold rating on Western Digital, noting that while the devil will be in the details, given the current slump in the memory market, there is a modest upside from such a deal with most of the value coming from HDD drive lengthening. As a result, Western Digital shares were up 7.3% for the week at $38.32.

At a Senate panel on Tuesday, Microsoft-backed OpenAI (MSFT) CEO Sam Altman said he was “nervous” about AI’s potential to interfere with elections and called for reflection on rules, licenses, and testing requirements for AI development. Sen. Cory Booker (D) noted that globally, AI is exploding and that there is no way to put this genie back in its bottle. In response to Sen. Mazie Hirono’s (D) mention of an AI-generated video of former President Trump’s arrest, Altman said creators need to make it clear when imagery is being generated rather than factual; he also said companies should be able to protect their data from being used for AI training but leave public materials open for these purposes. Microsoft shares rose 3% over the week to $318.34.

Lastly, Alibaba Group (BABA) posted disappointing earnings due to growing competition in China, its biggest market, and slowing economic rebound despite lifting COVID measures. The company’s revenue for Q1 2021 was RMB208.2 billion ($1 = RMB7.04), below analyst estimates of RMB210.3B; its revenue for the year ending March 31 was also up just 2% to RMB868.69B – its worst pace of growth since going public in 2014 – as direct sales in China fell by 1%. As a result, Alibaba’s New York-traded ADRs fell by 3.7% over the week to $83.98, while its Hong Kong-traded shares plunged by 1.6%.

The end result, this week’s tech headlines show the importance of innovation and adaptation in a rapidly changing market. Companies that can stay ahead of the curve and respond to new challenges are likely to thrive, while those that lag behind may struggle to compete. It is widely claimed that, staying informed is key for investors looking to make smart decisions in today’s fast-moving markets.


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