The stock market declined on Thursday morning, reflecting rising investor anxiety about the state of the global economy. A move from the European Central Bank sent overseas markets lower, and the impact spilled over into U.S. stocks as well. As of 11:30 a.m. EST, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 212 points to 25,461. The S&P 500 (SNPINDEX: ^GSPC) dropped 15 points to 2,756, while the Nasdaq Composite (NASDAQINDEX: ^IXIC) fell 62 points to 7,444.
Despite the overall concerns among investors, individual companies continue to have an important impact on sentiment. Streaming giant Netflix (NASDAQ: NFLX) has enjoyed impressive subscriber growth in recent years, and those favorable trends seem likely to continue. Yet for H&R Block (NYSE: HRB), tax reform has had pros and cons, and the tax-prep specialist is still navigating the impact of new tax laws on its customers.
Don't touch that dial
Shares of Netflix were down less than 1% after a stock analyst company issued positive comments about the streaming video specialist. Piper Jaffray said that Netflix could see double-digit percentage growth in subscriber counts over the past 12 months, with projections coming in 3.5 percentage points better than the 9.1% consensus among those following the stock. Piper expects Netflix to see huge traction on the global front, with international subscribers counts expected to see gains of more than half compared to the 38% that most had expected.
Image source: Netflix.
Many Netflix shareholders have worried about slowing subscriber growth in recent years. Particularly in the U.S. market, Netflix has just barely kept expansion above a 10% rate since 2016, and eventually, the company would like to take its current domestic subscriber base of roughly 60 million households and grow it to 90 million.
Nevertheless, international markets are the bigger opportunity for Netflix. Despite competition overseas, Netflix has been smart about developing not just streaming technology but also prized content, and that could make the difference in selling global viewers on the value of its platform.
A not-too-taxing quarter for H&R Block
H&R Block's stock did better, rising 4% following the release of its fiscal third-quarter financial report. The tax preparation specialist said that it had to deal with delays in tax return filings as a result of the government shutdown and the late start to tax season, contributing to a drop of total return volume of 1% through Feb. 28. In particular, assisted returns were down 6.5%, with more customers opting to use H&R Block's do-it-yourself return option. Revenue dropped 4% from the year-earlier quarter, but per-share losses got cut in half due largely to H&R Block's own tax benefit from the lower corporate tax rate.
Stock analysts have feared that H&R Block would see a big drop in returns this year, due in large part to the increase in the standard deduction and other moves to try to simplify tax preparation. Yet comments from executives seem to suggest otherwise, as CFO Tony Bowen said that the company "remain[s] on track with our strategic and operational plans and expect[s] to achieve our financial outlook for the fiscal year."
As we've seen in other areas, this year's tax season has seen some early surprises give way to more typical conditions. That could prove to be the case with H&R Block's business as well -- especially if taxpayers striving to make the most of tax reform decide they need help to do so.
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