Shares of Netflix jumped more than 14% after hours on Tuesday, showing upward momentum through Wednesday, following the company reporting better-than-expected earnings.
Netflix reported the addition of 2.41 million net global subscribers, more than doubling the figures the company had projected a quarter prior. Earnings per share came in at $3.10 for the third quarter compared to analysts’ expectations of $2.13 per share, according to Refinitiv.
Highlights from the company’s earnings report include an announcement the company will begin to crack down on password sharing next year, opting to allow people who have been borrowing accounts to create their own. The company said it will also allow people sharing their accounts to create sub-accounts to pay for friends or family to use theirs.
Advisors looking to add Netflix exposure to portfolios can find it in the Invesco S&P 500 Equal Weight Communication Services ETF (EWCO). EWCO is based on the S&P 500 Equal Weight Communication Services Plus Index, which comprises companies in the GICs communication services sector within the S&P 500. Each security is given an equal weight at each quarterly rebalance.
Equal weighting is a methodology favored for enhanced diversification and mitigating size bias in a portfolio. Giving each security an equal weight at each quarterly rebalance ensures the fund is selling relative winners and buying relative losers, giving EWCO a tilt towards the value factor compared to market cap-weighted peers.
Holdings in EWCO as of October 18 include Twitter Inc (TWTR), Warner Bros Discovery Inc (WBD), Omnicom Group Inc (OMC), Electronic Arts Inc (EA), T-Mobile US (TMUS), Activision Blizzard Inc (ATVI), and AT&T Inc (T), among others.
EWCO has $29 million in assets under management and charges a 40 basis point expense ratio.
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