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Streaming giant Netflix more than doubled its own projections for new customers as quarantined audiences gorged on series like Tiger kingBut the company predicted a weaker second half of the year if orders to stay home to fight the coronavirus are lifted.
The world’s largest streaming service gained 15.8 million paying customers from January to March, bringing its global total to 182.9 million. Netflix had predicted it would add 7 million during the period.
However, the company warned that it expected fewer new subscribers from July to December compared to the previous year. Many people who had joined then have likely already signed up, the executives said.
“We hope that viewing will decrease and that membership growth will slow as the home lockdown ends,” Netflix said in a letter to shareholders.
The company is among the few companies to benefit from government orders imposed in March to keep people away from each other in order to stop the spread of the new highly infectious coronavirus. While the S&P 500 Index has fallen 19% from its all-time high on February 19, Netflix has gained 11% during the same period.
Netflix also issued a bullish forecast that it would add 7.5 million new customers for the current quarter, which ends in June, though the company said it was “mostly guesswork” given uncertainty about when orders to stay on could be lifted. House. Analysts surveyed by FactSet expected 3.8 million.
Investing.com senior analyst Haris Anwar said Netflix’s big profits showed it “is the best move to stay home.”
“That said, there is no guarantee that a global recession and increased competition will not affect Netflix in the latter part of the year,” said Anwar. “There is little clarity from the company about the future, and that is likely to hurt equities in the short term.”
Netflix said the shutdown of worldwide movie and television production had temporarily increased its free cash flow, but could delay programming a bit by a quarter. In the second quarter, the impact will be “modest” and will primarily affect multi-language dubbing, the company said.
Most of the scheduling for 2020, and much of 2021, has already been filmed and is remotely wrapping up in post-production, content director Ted Sarandos said in a post-earnings interview with an analyst.
“We don’t anticipate changing the schedule much, certainly not in 2020,” Sarandos said.
For the quarter just ended, Netflix earnings per share fell short of analyst expectations. The company posted diluted earnings per share of $ 1.57, below the consensus of $ 1.65, according to IBES data from Refinitiv.
Total revenue increased to $ 5.77 billion from $ 4.52 billion. Analysts on average expected $ 5.76 billion.
The appreciation of the US dollar, due in part to the coronavirus crisis, dragged international revenues, the company said.
In the quarter, Netflix documentary on real crimes Tiger king, about a colorful caretaker at the Oklahoma Zoo, became a cultural sensation. He also launched reality show Love is blindand a new season of thriller in Spanish Money heist.
As video streaming has grown in the United States, the market has become more competitive with the debut of Walt Disney’s Disney + and its upcoming rivals. That has led Netflix to seek growth abroad.
The company’s biggest expansion from January to March came from Europe, where it added 4.4 million new customers.
The most popular Netflix plan in the United States costs $ 13, almost double the cost of $ 7 per month for Disney +.
Netflix does not currently plan to raise its prices given the global pandemic, Product Director Greg Peters said.
“At this point, we are not even thinking about price increases,” Peters said.
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