Netflix, the video streaming company in its first quarter reported 16 million new subscriptions. This surge in the subscription count, which is almost double the number of sign ups it received towards the end of 2019, shot up the company’s share value by 40%. Today the company has over 182 million subscribers worldwide and has set a target to achieve 7.5 million more members by June quarter.
Netflix is one of the few companies which benefited out of the current lockdown scenario, with most of the population house-bound all across the globe. Over last few weeks, the demand for its services went so high that it decided to hire an additional 2,000 customer support staff to handle the increased viewership. Last month the company, along with other video streaming service providers, decided to
reduce the quality of its videos in different nations to ease strain on internet service.
Increase in subscriptions got the company the attention of Wall Street investors, but the analyst warned the investors of decline in its growth in next quarter as the governments all across the world are expected to lift the lockdowns soon. Besides, in the industry where content is the king, the company is struggling to get new content as all the production work has come to a halt due to corona-triggered shutdown. Also, increasing competition, from big players such as Disney, Amazon, HBO etc makes its run for quality content all the more difficult.
The company’s CEO Reed Hastings, while discussing Netflix’s first quarter results said, “We’re in the same uncertainty that everyone else is. The thing we are certain of is the internet is growing. It’s a bigger part of people’s lives, thankfully. And people want entertainment. They want to be able to escape and connect, whether times are difficult or joyous. We’ve had an increase in subscribers in March that’s essentially a pull-forward of the rest of the year.”
According to Bloomberg, which reached out to several analyst over their views about company’s performance said that seven analyst suggested that it probably is the best time to sell the shares, as the company is performing at its best with its revenue reaching up to $5.76 billion, 27% higher as compared to the same period in 2019. While six analyst believed that it would be a wise call to hold on to the shares as the value might go up in future, as the company showed potential by doubling its profits to $709 million from $344 million in the first quarter of 2019.
But many were also sceptical if Netflix would be able to retain its current growth trend. Analyst Justin Patterson told Bloomberg that Netflix, which has a strong buy rating on the stock, might hit a staggered growth between the second half of 2020 and the first half of 2021, as he felt that any further expansion was less likely.