The S&P/ASX 200 (ASX: XJO) finished broadly flat across the shortened week while US stock markets fell by around 2%.
Here are my three key investor takeaways from the week.
Losing patience
Netflix’s (NASDAQ: NFLX) quarterly earnings report didn’t appear all that bad at first blush, with subscribers actually growing by 500,000 when the impacts of cancelling Russian accounts were excluded.
But the forecast of further losses of up to 2 million subscribers shocked the market with even well-known hedge fund managers like Bill Ackman of Pershing Square caught out by the surprise.
Given the number of analysts that cover the company, it seems strange that there would be such a significant miss on earnings, but clearly investors are tiring of any company that fails to drastically exceed expectations.
Netflix and many of the other larger tech companies have been major beneficiaries of passive ETF flows, along with quality and market cap driven factor strategies, with the reversal likely self-reinforcing.
That said, understanding what the market is willing to pay for the company is more difficult than ever.
Cyclical, structural or neither
One of the more interesting commentaries during the week came from global fund manager GQG Partners Inc (ASX:GQG), whose CIO Rajiv Jain reiterated his previous comments around the cyclicality of technology companies.
Whilst many managers believed tech companies could grow in perpetuity, GQG pointed out that historically, tech and digital investment had always occurred in waves with Netflix more proof that this time was no different.
Pricing power matters
Pricing power seems to matter most in this environment, but management only knows if they have it sometime after raising prices.
The likes of Brambles Limited (ASX: BXB), ResMed CDI (ASX: RMD) and Woolworths Group Ltd (ASX: WOW) clearly do, but who else does?