ISM Manufacturing PMI in United States for Apr is 49.2, Below Forecast

The ISM Manufacturing Index for April was 49.2, missing expectations of 50, March was at 50.3. The ISM Manufacturing Index came back into contraction in April due to the lower demand, but the price index was at a record high since 2022. New orders index was back in contractionary territory in April at 49.1, down 2.3 points. New export orders also fell in April, by 2.9 points, to 48.7, also falling into contraction and marking the first time in three months that orders from overseas customers have contracted. After a sharp rise in March, the production index fell by 3.3 points to 51.3 in April, while it remained in expansionary territory.

Backlogs of orders contracted at a faster rate of 45.4 in April, down 0.9 points from 46.3 in March. The Price Input Index rose to 60.9 in April, up 5.1 points, a record high since June 2022. While the Employment Index contracted for the seventh month in a row albeit at a slow pace. The Employment Index rose to 48.6 from 46.3 in March. Factory inventories remained at 48.2, while customer inventories rose from 44 in March to 47.8 in April, a slower pace of contraction. In terms of US stock market, data released last week eased investor concerns that the inflation would continue and renewed a hope for rate cuts, pushing the S&P 500 higher. We expect the S&P500 to maintain its momentum and fluctuate between 5,000-5,300 points.

In terms of industry, some streaming media companies have announced quarterly results this month. Many leading companies have impressive performances, surpassing the market expectations and seeing nice gains in stock prices.

Spotify(SPOT.US)’s revenue in 1Q24 increased by 19.5% YoY to €3.64 billion. Gross margin topped guidance by 121 basis points, reaching 27.6%, with gross profit of €1.0 billion, the first time that’s hit the billion-euro mark. Net income in Q1 came in at about €197 million, compared with a net loss of €225 million in 1Q23.

Total monthly active users grew 19% YoY to 615 million, a gain of 13 million from the previous quarter, but missed Spotify’s own guidance and analysts’ median estimate of 618 million. The lower-than-expected MAU growth was mainly attributed to the organizational change, a reference to Spotify’s December 2023 layoffs cutting 17% of its workforce. Average revenue per subscriber in Q1 increased 5% YoY to €4.55, driven by price increases but partially offset by product and market mix. Spotify plans to raise the price of its music streaming service by approximately $1 to $2 per month in several key markets later this year, after it raised prices in its biggest market less than a year ago, as well as in other territories. It is recommended to buy at US$287.0, target at US$335.0, and stop loss at US$275.0.

Netflix(NFLX.US) reported blockbuster financial results in Q1, as it returned to explosive subscriber growth. Revenue in Q1 grew 14.8% YoY to US$9.37 billion, higher than Netflix’s previous forecast due to favorable foreign exchange rates and stronger-than-anticipated membership growth. Operating profit amounted to US$2.633 billion, a YoY increase of 54%, with operating profit margin of 28.1%.Net income amounted to US$2.33 billion, up 79% YoY. In Q1, Netflix had a high-quality supply of content, including “Avatar: The Last Airbender,” the “Game of Thrones” creator’s sci-fi series “3 Body Problem,” Guy Ritchie’s “The Gentleman”.

The paid subscribers increased by 16% YoY to 260.8 million in Q1, stronger growth than market expected as Netflix built its ad-supported service and cracked down on password sharing. For the U.S. and Canadian markets, paid subscribers grew in Q1 by 2.53 million. In Europe, the Middle East and Africa, 2.92 million were added. In the Latin American region, 1.72 million joined. And the Asian-Pacific market saw a 2.16 million increase. For Q2, Netflix expects revenue of US$9.49 billion with net income of US$2.06 billion. It is recommended to buy at US$562.0, target at US$655.0, and stop loss at US$539.0.