{"id":391539,"date":"2020-04-22T07:14:03","date_gmt":"2020-04-22T05:14:03","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=391539"},"modified":"2020-04-22T07:14:03","modified_gmt":"2020-04-22T05:14:03","slug":"netflix-reports-massive-growth","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/internet\/391539\/netflix-reports-massive-growth\/","title":{"rendered":"Netflix reports massive growth"},"content":{"rendered":"

Netflix Inc posted the strongest financial results in company history Tuesday, adding a record 15.8 million paid subscribers – almost double the figure forecast by Wall Street analysts.<\/p>\n

Yet rather than gloat, the company\u2019s executives warned investors not to get too excited.<\/p>\n

Netflix benefited in the first quarter from an unprecedented health crisis, the global coronavirus pandemic.<\/p>\n

With billions of people stuck at home, the world\u2019s largest paid online TV network experienced an explosive jump in customers in March, with many binge-watching \u201cTiger King\u201d and \u201cLove Is Blind\u201d to ride out the quarantine.<\/p>\n

But there\u2019s no telling how long the boom will last. Netflix expects the surge to come at the expense of growth in the months ahead.<\/p>\n

\u201cOur guess is subscribers will be light\u201d in the third and fourth quarter, chief executive officer Reed Hastings said Tuesday on a call with investors.<\/p>\n

Netflix forecasts 7.5 million new subscribers in the second quarter – a great quarter under normal circumstances. But investors, who sent the stock to new highs this week, may have wanted more.<\/p>\n

Though they initially bid Netflix shares up as much as 12% after the close Tuesday, the rally soon fizzled. The stock was little changed as of 5:38 p.m. in New York.<\/p>\n

\u201cLike other home-entertainment services, we\u2019re seeing temporarily higher viewing and increased membership growth,\u201d the company said in a letter to investors. \u201cWe expect viewing to decline and membership growth to decelerate as home confinement ends.\u201d<\/p>\n

Netflix Growth Spurt<\/strong><\/p>\n

\"\"<\/a><\/p>\n

While Covid-19 has been devastating to the global economy, video-streaming services like Netflix and YouTube have found a captive audience.<\/p>\n

The new Disney+ service surpassed 50 million subscribers in just five months, a faster pace than predicted. Three new video services, Quibi, Peacock and HBO Max, arrive this quarter and hope to have similarly rapid starts.<\/p>\n

Skeptics have said Netflix would lose customers to the new competition. But thus far, those fears have been unfounded.<\/p>\n

\u201cWhat we\u2019re seeing is people are cutting linear TV and adding Disney+ on top of Netflix,\u201d said Nick Grous, an analyst at Ark Investment Management LLC, which owns the shares.<\/p>\n

The quarter\u2019s results reflected two of Netflix\u2019s strengths: breadth of programming and a global footprint.<\/p>\n

Months after releasing Oscar-nominated movies such as \u201cThe Irishman\u201d and \u201cThe Two Popes,\u201d Netflix cracked the code on tabloid-style documentary TV. \u201cTiger King,\u201d about big-cat zoo owners, was the biggest new hit series for Netflix in the US since \u201cStranger Things,\u201d according to Nielsen.<\/p>\n

Meanwhile, \u201cLove Is Blind,\u201d a reality dating show, drew 30 million viewers in its first four weeks, Netflix said. A newer dating show, \u201cToo Hot to Handle,\u201d has been one of the most popular shows on Netflix since its release last week.<\/p>\n

Netflix also showed strong growth all around the world. Business in the US and Canada picked up after a few sluggish quarters, with Netflix adding 2.31 million new customers in its biggest market.<\/p>\n

That was more than the prior three quarters combined. The company signed up nearly 7 million customers in Europe, the Middle East and Africa, the most of any region.<\/p>\n

The coronavirus had another unintended benefit for Netflix: its first quarter of positive free cash flow since 2014.<\/p>\n

Netflix produced $162 million in the first three months of the year. While the company had already vowed to narrow its cash burn in 2020, a worldwide pause in TV and movie production lowered costs in the quarter and will continue to do so this year.<\/p>\n

Netflix turns first quarter of positive free cash since 2014<\/strong><\/p>\n

\"\"<\/a><\/p>\n

Production shutdowns could turn into a headache for Netflix depending on how long they last. Subscribers are accustomed to a steady flow of new content, and some of its competitors, such as Walt Disney Co. and AT&T Inc\u2019s WarnerMedia, have big libraries they can use to entice viewers.<\/p>\n

But chief content officer Ted Sarandos said Netflix has finished production on most of its new programs for 2020.<\/p>\n

Prior to the earnings release, Netflix investors had sent the shares to record levels, making it especially hard for the company to sustain the rally – even with blockbuster numbers. The stock had climbed 34% through Tuesday\u2019s close, compared with a 15% decline for the S&P 500.<\/p>\n

\u201cI understand the caution around the response to the stock,\u201d Grous said, before adding, \u201cBut we\u2019re not focused too much on quarter to quarter. We\u2019re thinking about the long-term trend here, and that is explosive growth.\u201d<\/p>\n

\n

Read: Netflix sees new South African show as key to unlocking growth<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Netflix Inc posted the strongest financial results in company history Tuesday, adding a record 15.8 million paid subscribers – almost double the figure forecast by Wall Street analysts.<\/p>\n","protected":false},"author":59,"featured_media":282892,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9882],"tags":[26,263],"class_list":["post-391539","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-internet","tag-headline","tag-netflix"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/391539","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=391539"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/391539\/revisions"}],"predecessor-version":[{"id":391547,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/391539\/revisions\/391547"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/282892"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=391539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=391539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=391539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}