Lockdowns and stay at home orders have been the new orders of the day around the world for the past 3 months or so, economies have been plunging deep and deeper.
Nonetheless, as the saying goes one man’s poison is another man’s meat is greatly manifesting its relevance with media service provider and production company Netflix Inc. (NFLX).
In the last three months, Netflix has recorded a staggering 15.8 million new subscribers to its streaming services bringing the total number of its worldwide subscribers to a whopping 182.9 million.
This number of new subscribers is more than double the 7 million Netflix had projected it would gain during this period.
The company was quick to declare the rapid spike will only last in the short term. Hence, from July to December Netflix expects less new subscribers.
“We expect viewing to decline and membership growth to decelerate as home confinement ends,” read Netflix statement in a letter addressed to shareholders.
A Blessing in Disguise
Without a doubt, many businesses have been performing dismally even others completely suspending entire operations due to the coronavirus pandemic. Apparently, some essential businesses like retailers have been experiencing a rise in demand in the same period and Netflix fits in this list.
Financial markets including stock indexes have been falling day in day out. Since February, S&P 500 Index .SPX has declined by 19% apparently in the same time frame also Netflix stock is up by 11%.
This has resulted to the company adjusting its projections, Netflix claims it will still register another 7.5 million new subscribers before the current quarter wraps up in June.
Haris Anwar, a senior analyst at Investing.com, believes stay at home orders is to account for positive performance of Netflix stock. He however believes the rally will only last in the short term.
“That said, there’s no guarantee that a global recession and increased competition won’t hit Netflix in the latter part of the year. There’s little clarity from the company about the future, and that’s likely to hurt the stock in the short run,” said Anwar.
While on a post earning interview Netflix Chief Content Officer Ted Sarandos, assured investors they are doing the best within their abilities and what current situation can allow ensuring the company’s operations won’t be affected much.
“Most programming for 2020, and much of 2021, already has been filmed and is being finished remotely in post-production. We don’t anticipate moving the schedule around much, certainly not in 2020,” said Sandaros.
