Markets are down more than -0.9% after January’s wholesale inflation report surprised to the upside, intensifying stagflation concerns as growth slows and the labor market softens. The VIX, often referred to as the market’s “fear gauge,” surged approximately +16%, as investors reacted to a +0.5% MoM rise in headline PPI, above the +0.3% consensus, while core PPI (excluding food and energy) surged +0.8% versus expectations of +0.3%. On a YoY basis, headline PPI rose +2.9% and core climbed +3.6%, both above estimates and reinforcing fears that inflation remains stubbornly sticky.
Netflix Walks From Warner Bros. Discovery Deal
Netflix (NFLX) shares jumped more than +8% in premarket trading after the company declined to raise its bid for Warner Bros. Discovery (WBD), deeming Paramount Skydance’s (PSKY) sweetened $31/share , $111B offer unattractive. Instead, NFLX will collect a $2.8B breakup fee, reinvest $20B into content this year, and resume share repurchases. While PSKY, which agreed to cover the fee, is also rallying as it pursues WBD as a centerpiece of its turnaround strategy. Investors appear relieved that NFLX avoided taking on over $50B in additional debt for a deal management called a “nice to have,” not a “must have.”
Block Soars as AI-Driven Overhaul and Strong Outlook Ignite Rally
Block (XYZ) is up more than +19% in premarket trading after the company announced a sweeping -40% workforce reduction, with CEO Jack Dorsey citing rapid advances in AI as enabling smaller, more productive teams. While Q4 results were largely in line, gross profit beat estimates and Cash App delivered strong +33% YoY growth. More importantly, XYZ issued robust Q1 and full-year 2026 guidance, projecting gross profit and operating income well above consensus, reinforcing investor optimism around margin expansion and a leaner, AI-driven operating model.
Zscaler Beats and Raises but Expectations Prove Too High
Zscaler (ZS) is down more than -12% in premarket trading despite delivering a clean beat and raising guidance, as investors appeared to be positioned for even stronger upside amid ongoing debate around organic growth. Fiscal Q2 revenue rose +25.9% YoY with EPS of $1.01, both ahead of expectations, while ARR grew +25% (+21% ex-Red Canary) and operating margins topped +22%, driving a Rule-of-62 performance well above the Rule-of-40 benchmark. The company guided Q3 and full-year results above consensus, lifting revenue, ARR, and EPS outlooks, but the muted stock reaction suggests expectations had already reset higher.
Duolingo Drops as Outlook Prioritizes User Growth Over Profits
Duolingo (DUOL) is down more than -26% in premarket trading after issuing weaker-than-expected 2026 guidance, overshadowing a solid Q4 beat where revenue rose +35% YoY, bookings grew +24%, and adjusted EBITDA margin reached 29.8%. Management signaled a strategic pivot toward prioritizing daily active user (DAU) growth over near-term profitability, targeting +20% DAU growth and 100M users by 2028, but guiding to slower +11% bookings growth this year (vs. prior ~20%) and lower margins. CEO Luis von Ahn emphasized that near-term margin pressure is the trade-off for scaling DAUs, while the company also authorized a $400M share repurchase program.
