For many companies, the coronavirus pandemic has been a terrible and largely unexpected situation to deal with. However, for others, business has been booming as more people stay at home and have little else to do in their spare time. Not surprisingly, Netflix (NASDAQ:NFLX) was already expected to see a dramatic increase in their number of subscribers, especially since there aren’t many entertainment outlets or venues open at this time. However, it turned out to be much better then even optimists were anticipating, with the company reporting 16 million new subscribers in the first quarter.
This was more than double what the Netflix was originally expecting, with most of this increase coming from the past month or so when the lockdown really entered into effect. However, the company also warned that this surge in growth is primarily a one-time thing and shouldn’t be expected going forward. At the moment, Netflix has around 182 million subscribers around the world
“Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth,” said the company in its letter to shareholders, pointing out that this sudden surge began in mid-March when the number of people working remotely and being quarantined skyrocketed. “We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon.”
Revenue for the quarter came in at $5.8 billion, a significant hike from the $4.5 billion seen last year. While subscriber numbers were well above what analysts were expecting, they were pretty close in terms of their revenue goal, with Wall Street predicting $5.75 billion in revenue for the quarter.
Although Netflix has gone on to say that it will be operating without disruption in the short-to-mid term, especially from a administrative and technical capacity, the company has said the long-term implications of the coronavirus could be pretty significant. Production of all new shows and content has been virtually halted, with there being no specific date for when things will return to normal.
Shares of Netflix ended up spiking by almost 10% just after the markets closed when the announcement was made. Within minutes, however, the stock market corrected and prices ended back where they were trading at beforehand. Netflix was always considered one of the more promising coronavirus stock picks during this time, so it’s not surprising that shares of the company have increased by almost 30% over the past month or so. While it’s anyone’s guess as to how and when this coronavirus pandemic will settle down, it seems pretty clear that companies like Netflix will continue to do well in the meantime.
Netflix Company Profile
Netflix’s primary business is a streaming video on demand service now available in almost every country worldwide except China. Netflix delivers original and third-party digital video content to PCs, Internet-connected TVs, and consumer electronic devices, including tablets, video game consoles, Apple TV, Roku, and Chromecast. In 2011, Netflix introduced DVD-only plans and separated the combined streaming and DVD plans, making it necessary for subscribers who want both to have separate plans. – Warrior Trading News
