The markets are in an uncertain time right now as the world eagerly awaits the end of the coronavirus situation.
However, as a whole, we still don’t have any idea when or what that will look like. Experts like Tej Kohli believe that even though we have questions, the world does keep spinning, and investors and business owners have to make sense of it all.
It’s no surprise that companies who stream media are in good shape right now. Europe is even trying to lessen the data being sent each day to “save their Internet”.
Investors continue to look for safe bets in this environment, and where better to look than a company who has become synonymous with news reports of “people watching Netflix” and not much else?
The name brand recognition has left Netflix in a great spot. This may seem like an interesting statement about a company that has lost 20% of its value over the past month; however, the competitors in the marketplace are down a lot more.
ViacomCBS has lost almost 70% of its value, Disney is down almost 40%, and even Comcast has lost about a quarter of its value.
Netflix sits at down roughly 17%, which isn’t bad compared to some of those other numbers that we’re seeing there.
On top of that, they actually have some long-term growth potential from all of this due to the “new normal” that we could all be experiencing.
Now, hopefully, we are not going to be quarantined and in danger for as long as some reports are suggesting. Even if we do emerge from this crisis relatively soon, Netflix should have a jump on subscribers and a new watching pattern that favours the streaming service in a big way.
The biggest problem that Netflix has had is the fact that it has increased its production in a big way. They are going out of their way to buy shows that are interesting, as well as a newfound focus on making shows that are interesting.
That doesn’t come cheap, and Netflix is finding out first-hand that it’s not great to burn through piles of cash as a business. That’s some obvious wisdom, but so is the fact that increasing subscribers will help them get through that cash burn.
The more subscribers they pick up over the next few months, the more will be exposed to their content. As long as their content production is on point, they should be able to keep these subscribers and keep them in their sales funnel for a long time down the road.
Netflix is not a “major” expense due to their price point being just more than a few coffees in any given month. That stands out as a great “cheap” form of entertainment for individuals, families, and children.
People will continue to look for things to do in this environment, and even though their value has decreased slightly, Netflix is poised to cash in down the road.
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