What is happening with Netflix (NFLX.OQ) after the pandemic? ⏯️
The ongoing year has been a slower one for the streaming giant, as well as for its key competitor Disney+. Both companies failed to meet Wall Street’s expectations for subscriber additions.
For Disney+, the number of 103.6 million subscribers at the end of the last quarter didn't even come close to the 110 million that had been anticipated. Netflix, on the other hand, added 3.98 million new subscribers for a quarter to end-March, which was way below the 6.25 million consensuses.
Since both Netflix and Disney had explosive and steady growths, analysts and executives grew uneasy and proposed three pandemic-driven theories for the drop: the subscriber pull-forward, the content squeeze, and the reopening. The pull forward explains how the COVID-19 pandemic drove users to the streaming companies at the beginning and is now driving them away. Netflix CFO Spencer Neumann said that with almost 40 million paid net adds in 2020, to be left with fewer potential customers in 2021 is not unusual.
Still, shares of Netflix are up over 5% in June, primarily boosted by an upgrade from Credit Suisse analyst Douglas Mitchelson, who moved from “Neutral” to “Outperform” with a price target of $586.00 per share.
The analyst believes the slowdown is just temporary and predicts subscriber growth will go back to normal in Q4 2021. There still isn’t a streaming service that has come close to dethroning Netflix, and recent survey data can confirm this. He adds that Netflix still wears the crown if the content is king in streaming. 👑
“Our early 2021 survey of U.S. consumers showed the strength of Netflix’s position in streaming, including (a) respondents highlighting Netflix’s original content, an area where Netflix will maintain a significant lead even as competitors ramp their efforts; (b) an appreciation for its on-demand, ad-free, bingeable, easy-to-use, and exclusive content; (c) few complaints about Netflix subscribers among our respondents, with only 8% indicating a price/value issue; and (d) leading satisfaction among SVOD services with 91% satisfied,” Mitchelson said in a note sent to clients.
The analyst stresses that the content calendar is just getting better, especially between August and December. “Stranger Things” is returning with Season 5 and “Bridgerton” with Season 2, so users will be content, and a stronger full-year slate is anticipated in 2022.
If these predictions come true, Netflix may bring a delightful experience for both its users, as well as traders. While Q4 2021 and 2022 are still relatively far and a lot can change until then, there is one event traders should be aware of soon – Netflix is due to report on this quarter’s performance on July 20. 📅
Watch out for Netflix's news next month and see if anything unfolds on the Netflix (NFLX.OQ) chart!
Your NAGA Team
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