Along with all the other online services, too
NETFLIX
+ 1.48%
closure:0
opening:501
Tall:509.25
low:493.54
cycle:–
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Celebrated her for 2020, but 2021 that has just begun no longer brightens her face. Since January 1 last year, Netflix stock has risen more than 44%, from $ 345 a share to $ 498 a share. After a record high of $ 545 a share in late December, the price has fallen 8 percent since the beginning of the month.
In the first half of the year, and under the auspices of the Corona Closures, the company won a boost of over 25 million subscribers. But then came the third quarter and the recruitment rate slowed significantly when the company added only 2.2 million subscribers, which was also much lower than expected in the market. At the end of trading today on Wall Street it is expected to publish its reports for the last quarter of 2020, and also for the entire year.
It should be mentioned that in the last quarter morbidity records were recorded in Corona in the US, the company’s main area of activity, as well as in other countries. The company itself expects an increase of 6 million in the number of subscribers in the last quarter of 2020, ie a recovery in the recruitment rate compared to the third quarter, but still lower than the recruitments in the first quarters (15 million) and the second (10 million).
Market expectations are mixed. On the one hand, there are those who believe that Netflix has reached a certain ceiling in terms of its subscribers in light of the growing competition from the competitors’ streaming services, Disney Plus (NYSE: DIS) and Amazon Prime Video (NYSE: AMZN). However, others disagree. Here’s a picture of the balance of power: As of the end of the third quarter, Netflix had 195 million subscribers worldwide, Disney had 86 million in early December, and Amazon, which has less transparency, reported 150 million subscribers in early 2020.
The consensus on Wall Street still holds a buy position, but the stock price range ranges from $ 235 at the lower threshold to $ 700 at the upper threshold. The stock is currently at $ 85 below the consensus median. Analyst Daniel Salmon has lowered his recommendation for an over-return on Netflix. Yes, downloaded.
Analyst Laura Martin Manidham, on the other hand, tells her clients to sell the company’s shares and buy that of the younger competitor, Rocco. She also believes that Disney will overtake Netflix in the number of subscribers within 24 months. Disney has only been in the streaming market for a year, and if it maintains the current rate of recruitment it could happen, meanwhile, by the way, it is already going to overtake the original target of 90 million subscribers this year alone in 2024 (new forecast: 230 million). However, it is not at all certain that the volume of recruitments of her debut year will be restored in the next two years.
How were Netflix’s results compared to analysts’ forecasts the last time it published reports? So the bottom line is that it posted earnings of $ 1.74 per share (earnings of $ 790 million per company), higher than the figure of $ 1.47 per share in the corresponding quarter, but lower than analysts’ forecasts for earnings of 2.13 per share. In terms of revenue, these stood at $ 6.44 billion, 22.7% higher than in the same period last year and higher than the projected revenue of $ 6.38 billion.
Netflix results of course depend on the number of subscribers, and this figure in turn depends largely on the content. In the past year, the company has led in the number of original productions it has presented (series and movies combined): about 40-50 productions per month, according to Variety (in 2019 as a whole, 371 original productions went up on Netflix). Her touring hits lately have been the new season of “The Crown,” “Rached” with Sarah Paulson and of course “Queen Gambit.”
The reputable Netflix library is honored in its place, but some of the subscribers come following hype created around new content. In this regard, Netflix will need to book new titles this year that will become the talk of the day, and in this race all the players in the arena, including her, start at the same point.
So investors for their part can look at the list of content that will come up later, examine who the creators are behind the scenes and the actors in front of the screen, and wonder if there are aces to pull off against Amazon and Disney, but for that there might be another analyst, or fortune teller. Either way, last week the streaming giant announced that in 2021 it will release 71 films, including “Red Notice” with Gal Gadot, Ryan Reynolds and The Rock, “Don’t Look Up” starring Jennifer Lawrence and Leonardo DiCaprio and more.
It will also be interesting to see whether, in the context of continuing to deal with the Corona virus, the company has succeeded in promoting its penetration into markets outside the US, such as Europe, where traffic restrictions were tightened at the end of 2020 in Germany, the UK and France, for example. Constitute 38% of all subscribers, those in Europe, the Middle East and Africa are 32%, in Latin America there are 19% of subscribers and in Asia and the Pacific a share of 11% in the pie.