NFLX Stock: Netflix (NASDAQ:NFLX) Benefits Off COVID-19 Induced Lockdowns

 Streaming company Netflix (NASDAQ:NFLX) topped subscriber estimates for Q1 2020 as it gained more as a result of people staying at home during these COVID-19 induced lockdowns globally. 

Netflix reports 15.8 million new subscribers in Q1 2020

During the quarter ended March 31st, the company reportedly added around 15.8 million subscribers as people turned to its streaming services for entertainment during the lockdowns.  This was more than two times its estimate as the company had projected that it will add 7 million new subscribers.  

In an earnings conference call, Netflix CEO Reed Hastings indicated that the company has incredible subscriber additions in March which is a push forward for the remaining part of 2020. As a result, the company is expecting lighter subscriber growth in the third and fourth quarters compared to previous years. 

Equally the company has indicted that viewership could declines with membership growth also decelerating as authorities lift lockdowns. This is a practical assumption considering the number of subscribers could potentially decline as people leave homes to return to work once the coronavirus eases.

More tailwinds for Netflix to continue growing subscribers

However, if the coronavirus outbreak persists there is a possibility that this subscriber tailwind could continue. This is because social distancing measures have to be strictly followed to avert the possibility of a second wave of infections. According to Robert Redfield the CDC director, there is a possibility of a second wave coronavirus infection that might correspond with the winter flu season. 

Netflix could be in demand after the pandemic because of the economic fallout caused by the pandemic. More than 26 million people in the US filed for unemployment in recent weeks and Morgan Stanley predicts that in the Q2 unemployment rate could be around 15.7%. This could be a tailwind for the steaming giant as people turn to streaming of movies from home which is cheaper compared to going to amusement park or theatre. 

The company expects 7.5 million new subscribers in Q2 but that number might be higher as lockdowns extend.

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