As to be expected, Netflix (NASDAQ: NFLX) has been doing extremely well during this pandemic. While the first quarter of this year already saw some impressive subscription numbers from the entertainment giant, Netflix did quite well for itself in this second quarter. The company announced in its Q2 financial results that it managed to add an extra 10 million new subscriptions during these past three months. The news also came with another announcement regarding the company’s new chief executive officer as well.
Overall, Netflix added exactly 10.1 million new subscribers, with the company reporting an impressive $720 million in net earnings. That’s drastically higher than the $270 million reported around the same time last year when things were still quite normal. Overall revenue is sitting at $6.15 billion, higher than the $4.9 billion seen last year, but not as big of a jump as that in the company’s profits.
Netflix also announced that it would be promoting Ted Sarandos to the role of Co-CEO. While he will still be working alongside Netflix’s other Co-CEO and Chairman, Reed Hastings, it is a sign that Sarandos could end up replacing Hastings in the years to come, especially since Hastings is a fair bit older.
“In Q1 and Q2, we saw significant pull-forward of our underlying adoption leading to huge growth in the first half of this year (26 million paid net adds vs. prior year of 12 million). As a result, we expect less growth for the second half of 2020 compared to the prior year,” said Netflix executives in an official statement.
Over the past couple of quarters, Netflix has added well over 20 million new subscribers, making it one of the top growing companies on the market right now thanks to this coronavirus pandemic. Shares have shot up by over 60% since the start of the year. Netflix has also confirmed that despite lockdowns and other coronavirus related slowdowns, the production schedule for 2020 remains mostly in place.
While these results were great all around, Netflix has stated that it doesn’t expect the second half of 2020 to have similar results. In the third quarter, the company expects to add only 2.5 million new subscribers. Whether for this reason or some other, shares of Netflix actually didn’t respond well to this announcement. The stock ended up falling as much as 10% in after-hours trading, although its likely to recover this amount quickly.
Although this initial growth wave is expected to die down, Netflix has undoubtedly been one of the best-performing stocks on the market. Should further lockdowns come on the horizon, it wouldn’t be surprising if the company’s third-quarter results end up being much better than anticipated as well.
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
