While the stock market as a whole has been in the midst of a serious dip since the onset of the coronavirus outbreak, Netflix stocks have actually seemed to be performing well. With people being forced to stay home from work and school, many analysts believe that companies like Netflix that count on people being indoors will actually see significant gains in the coming weeks. People will have nothing to do at home but watch Netflix, scroll through Facebook, and exercise on their Peloton machines, so those stocks should see a boost. However, one stock market analyst is now refuting this idea, saying that Netflix will be hurt by the outbreak, just like every other company.
Needham analyst Laura Martin estimated on Tuesday, per Yahoo! Finance, that Netflix shares will underperform. She believes that the streaming service won't be exempt from the struggling market, like many others have predicted. She argues that the company is faced with the threat of losing international subscribers, as well as potential cash.
While people may spend more time watching Netflix during a quarantine period, Martin points out that extra time won't give the streamer any more revenue. Subscriptions are already set, regardless of how many hours are spent watching content.
“NFLX charges a fixed price of $9-$16/month in the U.S., regardless of how many hours are watched,” Martin said. “More hours viewed by existing subs are not monetized by NFLX.”
Martin went on to explain that Netflix is a luxury item, not a need, and users in Europe and other international markets may choose to cut back on their luxuries as they stay home from work.0comments
“Italy just quarantined its entire country implying millions of travel employees are not going to work or get paid, and travel globally has declined precipitously,” Martin added. “Since NFLX is a luxury, we assume international churn will rise and offshore revenue growth will slow until COVID-19 retreats.”
How do you think the spreading of the coronavirus will affect Netflix and other streaming services? Let us know in the comments!
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