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Can Netflix stay one of Wall Street's favorite pandemic stocks? Results due Thursday

Published 07/14/2020, 01:45 PM
Updated 07/14/2020, 01:50 PM
© Reuters. FILE PHOTO: A smartphone with the Netflix logo is seen on a keyboard in front of displayed "Streaming service" words in this illustration

By Lisa Richwine

LOS ANGELES (Reuters) - Netflix Inc (NASDAQ:NFLX) will tell investors on Thursday how home-bound audiences and a lack of live sports have boosted its membership rolls even as streaming competition rises to unprecedented levels.

Shares of the online video pioneer, trading close to an all-time high at $517.94 on Tuesday, have jumped more than 73% since mid-March when much of the world was urged to stay home to help slow the spread of the novel coronavirus. During the same time, the S&P 500 has gained 32.7%.

In April, Netflix wowed Wall Street by reporting twice the number of expected signups for the first quarter, bringing its worldwide total to 182.9 million customers. The company tried to lower expectations by stressing that the pandemic-related boost likely would fade later.

Industry analysts still expect robust growth for April through June. The average forecast for new paying customers is 8.1 million globally, according to IBES data from Refinitiv.

Netflix has forecast 7.5 million customers for the period, which included the release of "Space Force," "Too Hot to Handle," a Jerry Seinfeld comedy special and a new season of "Money Heist."

At the same time, movie theaters were closed and major sports leagues canceled live competitions.

Consumers did, however, have several streaming options. Walt Disney (NYSE:DIS) Co's Disney+ came online in November, and AT&T Inc launched HBO Max in May.

Netflix boosters believe any pandemic lift will help cement the company's long-term position.

"Investment in high-quality episodic content across all genres and films likely ensures the top spot in the living room over time," Cowen & Co analyst John Blackledge wrote in a research note.

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One challenge, however, is that the coronavirus has halted many film and TV productions. Investors will look for an update from April, when Netflix said it had enough programming for 2020 and part of 2021.

Twenty-eight analysts rate Netflix "buy" or "strong buy," while 10 say "hold" and five recommend selling the stock.

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