Today's business and finance round up 16th August 2021
🎬Disney beats forecasts, closes gap on Netflix
16th August 2021
Good morning Tesco has followed in the footsteps of Amazon by opening its first "walk out" store with no checkout queues. The store in Holborn, central London, allows customers to pay for their shopping with in-store technology before walking out of the shop.
Disney beats forecasts, closes gap on Netflix
Port shutdown threatens global supply chains
Friday's market moves
FTSE 100 +0.4% 7,218 FTSE 250 +0.2% 23,788
The FTSE 100 closed the week strongly, up 0.4% to within a whisker of its best since February 2020 and the FTSE 250 was also higher by 0.2%, clocking another record high. A strong earnings season has helped to offset unease among investors about the potential threat to the global recovery from the Delta variant and more talk by central bankers about reducing crisis-era economic stimulus.
CONSUMERDisney beats forecasts, closes gap on Netflix
What’s going on?Walt Disney Co have reported a better than expected three months to July, with revenue up 45% to $17bn. The strong performance was driven by the reopening of Disneyland and Disneyworld in the US, France and China, this also helped the theme park division return to a profit for the first time since the pandemic hit. Subscribers to the streaming service, Disney+, doubled in a year to 116m. This compares to Netflix's 209m, but it narrows the gap between the two media giant’s subscriber bases to less than 100m.
Why is this important?
Disney is one of the few companies that can enjoy the best of both worlds as the global economies reopens, with its theme park division (good when restrictions lift) and streaming services (good during lockdown).Encouragingly for the business Disney+ has continued to perform strongly even as lockdown restrictions have lifted. Since launching in November 2019 Disney+ has amassed 116m subscribers, Netflix has gained 47m during the same period.Disney also owns two other streaming platforms, ESPN+ and Hulu, taking all three together the business has 174m subscribers. The rapid growth has even surpassed Disney’s own expectations, it initially projected that the streaming service would hit between 60m to 90m subscribers by 2024.
TakeawayNetflix added just 1.5m subscribers in its most recent quarter, if Disney continued at its current run-rate it could catch up to Netflix in less than 3 years.Disney has grand plans for its premier streaming service and is targeting 230 to 260m subscribers by 2024.
TRANSPORTPort shutdown threatens global supply chains
A single Covid case in one of the world’s busiest shipping ports could spell disaster for global supply chains. Ningbo, in eastern China, has shutdown one of its key terminals after one worker tested positive for Covid.The fear is that the port being partially shut down is just the beginning, and more shipping terminals and places of economic importance across the country could be shuttered if cases begin to spread. China’s “zero tolerance” approach toward Covid is likely to add even more stress on already stretched supply chains as the world reopens post lockdown restrictions and demand for consumer goods soar.China is a major producer of intermediate goods, which are used as inputs for making final goods outside of China. Closing shipping traffic creates a ripple effect for production and manufacturing in other countries because the intermediate goods become stuck or delayed.The timing of the closure, in the second half of the year, coincides with a period that is typically busier for global trade than the first because of the Thanksgiving and Christmas seasons celebrated in North America and in Europe.It’s expected that the supply bottleneck will lead to higher shipping costs which could pass through to end consumers. Adding even more fuel to already rising inflation.
Stat of the day
There are 3.9 billion active email users in the world compared to 3.5 billion social media users
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Richard Branson sells stake in Virgin Galactic to prop up other firms
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