Martin Gamble on US markets: Kraft Heinz, Netflix, Procter & Gamble

What was shaping up to be a disaster of a week for US indices, curtailed by Martin Luther King Day, turned out instead to be at worst mixed.

President Trump’s threats to impose tariffs on European countries over Greenland and hints at the use of military force to acquire the territory if it wasn’t possible to do so by other means put markets on edge.

Big tech stocks, in particular, fell sharply on concern they might be the target of retaliatory action from Europe. However, Trump’s subsequent U-turn and agreement of a deal over Greenland prompted a broad-based relief rally.

Pharma outfit Moderna was in demand as investors reacted to positive news on the cancer vaccine being developed in partnership with Merck.

Chip maker Intel rose in anticipation of its latest earnings but reversed these gains after the update itself disappointed with weak revenue guidance.  

Mixed results from GE Aerospace got short shrift from investors as airlines increasingly voice concerns about maintenance costs, with spares and repairs revenue a particularly lucrative source of revenue for the business.

Kraft Heinz

According to a regulatory filing by Kraft Heinz, its largest shareholder Berkshire Hathaway is preparing to sell the 27.5% shareholding it has held for nearly a decade.

The news sent shares in the food and beverage company down 6% to a new 52 week low. Since 2025 when the ill-fated merger was announced, the shares have lost around 70% of their value.

The Kraft Heinz investment is a rare misjudgement by Buffett who has admitted he underestimated how the ‘moat’ around traditional brands has shrunk in recent years, at the expense of value retailers like Walmart and Costco.

Buffett has previously noted that while Heinz’s ketchup business remains a "wonderful” business, the price paid for the merger lacked a “margin of safety”.

He famously added: “You can turn any investment into a bad deal by paying too much.”

The filing comes after Kraft Heinz’s announced plans to separate the two companies later in 2026.  

Netflix

The streaming giant marginally topped fourth quarter analysts’ forecasts as revenues grew 18% year-on-year to $12 billion, ahead of guidance, driven by more subscribers, pricing and growth in advertising revenue.

Those metrics led to a two-percentage point increase in the operating margin to 25%, driving 30% growth in operating income to $3 billion and a 31% increase in diluted earnings per share to $0.56.

However, the shares fell 2% to plumb fresh 52-week lows as investors weighed up Netflix’s cautious outlook, higher content costs and a pause in share buybacks ahead of the proposed purchase of Warner Bos Discovery.

For Netflix there are wider strategic considerations for the purchase which go beyond beefing up content and adding streaming customers.  

Data from Neilson show Google-owned YouTube consistently outperforming Netflix in total TV watch time.

Meanwhile, TikTok, owned by Chinese technology company ByteDance and YouTube Shorts have fundamentally changed consumer attention spans, presenting a new challenge for the streaming industry.

Netflix co-CEO Ted Sarandos has framed it as ‘spending time’ (intentionally watching) versus ‘killing time’ (passive browsing).

Procter & Gamble / Johnson & Johnson

Bellwether consumer goods company Procter & Gamble fell short of analysts’ revenue expectations in the second quarter, reflecting weaker consumer spending on essentials at lower income households.

Three of the group’s core five product categories experienced falling volumes including the Baby, Feminine Care and family segment which suffered a 5% drop.

Chief finance officer Andre Schulten said: “People have not stopped washing their hair, they still buy diapers, they do their laundry, albeit at a little bit slower pace, so the market growth has certainly slowed over the last 18 to 24 months.”

The company maintained its 2026 sales growth guidance of 1% to 5% and core earnings per share projection of 2% at the middle of the $6.83 to $7.09 range.

The shares responded positively, gaining around 2%, but they remain down by around 10% over the last 12 months.

Johnson & Johnson revealed better than expected revenues and profits for its fiscal fourth quarter and forecast full-year 2026 profit ahead of analysts’ estimates.

However, the combination of a strong 30% run-up in the shares over the last six months and a re-emergence of talc litigation concerns conspired to send the shares lower on 21 January.

J&J projected 2026 sales growing 5.9% at the midpoint of the forecast range and adjusted earnings per share up 6.9% to $11.53, compare with consensus estimates of $11.45.