Netflix is now worth more than some major business names including Disney, Exon and Costco. With the company set to announce its latest quarterly results in the next few days, it is expected to confirm a spike in new users. In fact, Netflix may even announce a record-breaking quarter in terms of new subscribers, all thanks to COVID-19.
The coronavirus outbreak has resulted in many changes to society, although one of the more fundamental ones has been the shuttering of outside life with many people now expected to stay home under a lockdown order. While this has not been a great period for business in general, there are those that have benefited from the change in behavior, with Amazon a prime example. Just like Amazon, Netflix is yet another of the household names that has seen a surge of activity lately, resulting in its stock price soaring.
While it was already reported that Netflix is now worth more than Disney, as the San Francisco Business Times points out, Netflix’s stock surge has also seen it bounce over some major companies, including Costco, Exxon Mobil, and IBM. Of course, some of those that Netflix has now risen above have suffered a market value decline in recent months, and partly because of coronavirus. Therefore, the change in hierarchy is not simply just a matter of Netflix gaining, but also how the pandemic has negatively affected other companies. One of the exceptions to this is Costco, considering the membership-only wholesaler has also seen a surge in activity, again due to the COVID-19 crisis.
The timing of these reports is all the more interesting as Netflix is only days away from confirming recent subscriber gains. Netflix is expected to announce its first quarter results on April 21 and these events are usually a lot more routine, with many simply scrutinizing how many subscribers were added compared to Wall Street expectations. However, with COVID-19 affecting the world as it is, and Netflix racing up the stock value charts, the emphasis on this quarter will be all the more revealing, and likely very different to the predictions made late last year. In its most recent quarterly, Netflix confirmed 8.8 million new subscribers globally, adding that it expects around 7 million to be announced in the first three months of 2020. This was compared to the 9.6 million subscriber gains in the first quarter of last year, with Netflix pointing to the 2019 Q1 increase as “an all-time high in quarterly paid net ads.” That prediction came on January 21 and the market has changed dramatically since then.
As a result of the coronavirus developments, it should be expected that Netflix is going to announce very different subscriber numbers to what it, and the market, expected just a few months ago. The question then only becomes how much higher will the numbers be and while that’s something that remains an unknown right now, the spike in new users is highly likely to help Netflix run close to, if not surpass, Q1 2019's 9.6 million. If it does manage to outdo that figure, it will officially be the best quarter for Netflix, in terms of new subscribers in a single three-month period. Although an impressive feat for the company, it will be one that has come under the most extraordinary of circumstances. Therefore, an equally important question from Netflix’s perspective going forward will be how many of those coronavirus surge subscribers remain paid customers once the pandemic ends?
Source: San Francisco Business Times
