April 19, 2020
All eyes on Wall Street next week will be focused on Netflix’s first-quarter financial results, which will be released at market close on April 21. At a time of uncertainty, Netflix’s subscriber growth will either validate the market’s enhanced fawning over the SVOD behemoth’s stock or bring it crashing down to earth, the harsh economic reality of the coronavirus even on the perceived virus-proof over-the-top video ecosystem.
Wall Street analysts project Netflix will add upwards of nine million subscribers worldwide, significantly more than the streaming pioneer’s seven million estimate. Scuttlebutt suggests that with shelter-in-place mandates legally enforceable throughout much of Western Europe, people have turned to video streaming in greater numbers for entertainment than before the pandemic.
Netflix shrewdly took the opportunity to bow true-crime documentary “Tiger King,” an immediate hit with social media water cooler banter, while boasting catalog can’t misses such as “The Office,” among others. The result: a spike in subscriber growth, according to streaming analytics firm Antenna.
“We believe the unfortunate COVID-19 situation is cementing Netflix’s global dominance, partly driven by the incremental content spend that is enabled by their massive and growing subscriber base,” Jeffrey Wlodarczak, analyst with Pivotal Research, wrote in a separate note.
Netflix ended 2019 with 167 million paid subscribers.
Indeed, the echo chamber reverberated surrounding Netflix’s strong position during the pandemic, to point the service’s stock topped Disney, among other media giants.
Even longtime Netflix bear Michael Pachter, with Wedbush Securities in Los Angeles, expects “moderate upside” to subscriber growth and revenue as social distancing guidelines around the world have “clearly driven” streaming usage, dampened churn and drove incremental sign-ups.
That said, Pachter cautioned that the “most meaningful” stay-at-home mandates globally only began in late February through mid March.
“The timing of COVID-19-related usage and sign-ups late in the quarter, combined with an existing high degree of penetration for Netflix’s domestic addressable market, suggests relatively tempered upside in our view,” Pachter wrote in a note.