Netflix, Delta, Snap, Chipotle and Oil Prices - 5 Things You Must Know Wednesday

Stock futures claw back some losses from the previous two sessions, but investors remain rattled by turmoil in oil markets; Netflix and Snap see users on their platforms surge; AT&T and Delta report earnings.

1. -- Stock Futures Rise but Turmoil Reigns in Oil

Stock futures traded higher Wednesday, clawing back some losses from the previous two sessions, but investors remained rattled by the damage the coronavirus pandemic has wrought on the global economy, particularly oil markets.

Contracts linked to the Dow Jones Industrial Average were up 230 points, futures for the S&P 500 gained 29 points and Nasdaq futures rose 91 points.

June futures for Brent crude, the global benchmark, fell 1% to trade at $19.13 a barrel on Wednesday while West Texas Intermediate crude dropped 2.16% to $11.32. WTI crude, the U.S. benchmark, fell to all-time lows earlier this week.

The plunge in oil prices “has stirred wider concerns of a sharp economic slowdown,” said Hayaki Narita of Mizuho Bank.

Oil ministers from the OPEC+ coalition held an unscheduled conference call Tuesday to discuss crude's plunge, Bloomberg reported, but a statement signaled they didn’t reach any new policy measures.

The alliance cut production by 9.7 million barrels a day earlier in April, but the cuts weren't seen as enough to counter the demand drop. 

Stocks declined for the second straight day Tuesday, hit hard again by the plunge in oil prices. The Dow slid 631 points, or 2.7%, to 23018, the S&P 500 slumped 3.1% and the tech-heavy Nasdaq tumbled 3.5%.

Meanwhile, the Senate approved a $483 billion coronavirus aid package for small businesses that adds funding for hospitals and virus testing programs. The House plans to vote on the package Thursday.

2. -- AT&T and Delta Report Earnings

AT&T  (T) - Get Report posted first-quarter adjusted earnings of 84 cents a share, 2 cents below forecasts, and the telecommunications giant withdrew its forecast due to the coronavirus pandemic.

Delta Air Lines  (DAL) - Get Report reported a first-quarter loss of 51 cents a share, narrower than analysts' estimates that called for a loss of 70 cents. Revenue of $8.59 billion was below forecasts of $8.92 billion. 

Earnings reports are also expected Wednesday from Visa  (V) - Get Report, Lam Research  (LRCX) - Get Report, Las Vegas Sands  (LVS) - Get Report, Biogen  (BIIB) - Get Report, CSX  (CSX) - Get Report and Kimberly-Clark  (KMB) - Get Report.

The economic calendar Wednesday includes mortgage applications from the Mortgage Bankers' Association at 7 a.m. ET and Oil Inventories for the week ended April 17 at 10:30 a.m.

3. -- Netflix Adds Nearly 16M Subscribers but Warns Growth Might Cool

Netflix  (NFLX) - Get Report was down 1% in premarket trading after the streaming company added 15.77 million net new paid subscribers in the first quarter, well more than its forecast of 7 million new additions made before the coronavirus pandemic, and above even the most optimistic analysts' forecasts.

But the company also cautioned that growth could cool during the second half of the year.

Revenue in the quarter was $5.77 billion, a little higher than forecasts of $5.76 billion. Profit in the quarter was $1.57 a share, below analysts' calls for $1.65. 

For the current quarter, Netflix guided for 7.5 million new paying subscribers, well above a consensus of 4.14 million. The company said it expects revenue of $6.05 billion, up 23% from a year earlier, and earnings of $1.81 a share, both above estimates of $5.98 billion and $1.55.

"Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth. In our case, this is offset by a sharply stronger U.S. dollar, depressing our international revenue, resulting in revenue-as-forecast," Netflix wrote in its quarterly letter to shareholders. "We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon."

4. -- Snap Users Jump 20% During Pandemic

Snap  (SNAP) - Get Report, the parent of Snapchat, jumped 20.5% in premarket trading Wednesday to $14.99 after revenue of $462.5 million beat analysts' estimates and daily active users rose 20% from last year.

Revenue in the period rose 44% from a year earlier. The figures cover the period through March 31, when most coronavirus shelter-in-place orders had been in place for only about a week.

"Communication with friends increased by over 30% in the last week of March compared to the last week of January, with more than a 50% increase in some of the geographies that were most impacted," the company said in a statement.

Snap said direct response advertising has grown and now makes up more than half of the company's total revenue.

Snap pulled its guidance for the second quarter, citing the coronavirus pandemic.

5. -- Chipotle to Pay $25 Million Fine for Tainted Food

Chipotle Mexican Grill  (CMG) - Get Report agreed to pay a record $25 million criminal fine to resolve charges it served tainted food that sickened more than 1,100 people from 2015 to 2018.

The company entered into a deferred prosecution agreement that will allow it to avoid conviction by continuing to improve its food safety program, federal prosecutors said, the Associated Press reported. 

The fine is the largest-ever amount for a food safety case.

Separately, Chipotle said sales rose 8% in the first quarter to $1.4 billion and digital sales jumped 81% as customers bought meals online while under stay-at-home orders. Digital sales accounted for 26% of Chipotle's sales during the quarter.

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