Stocks this week: Tiger King + coronavirus = Huge win for Netflix’s stock
The company is set to report its earnings after the bell Tuesday, and investors are eager to learn how the pandemic has altered Netflix’s business, viewership and subscriber count.
“It’s no surprise that streaming is surging right now. This is an unprecedented opportunity for Netflix,” McTernan told CNN Business. “Everyone believes it will be a massive beat. The question is how massive will it be.”
As demand for streaming video grows, Wall Street investors are growing hopeful that Netflix will soon raise prices, McTernan said. But that could be a tough pill for many customers to swallow with so many people out of work.
“I think bullish investors will say that higher usage means greater pricing power for Netflix. Bearish investors will likely say that economic slowdown plus more competition could mean less pricing power,” he said. “If there’s any insights on future pricing, then that’s big.”
Netflix’s stock has been surging: It’s up 30% this year. It finished at a record high Thursday, boosting its market value to nearly $193 billion. That eclipsed Disney’s market value of $184 billion. When Disney’s stock hit an all-time high in November 2019, its market value was twice Netflix’s.
Like its competitors, stoppages in production because of coronavirus could pinch Netflix’s content supply chain, McTernan noted. Netflix could weather the storm if its massive library keeps pumping out hits like “Tiger King: Murder, Mayhem and Madness,” but that’s no sure thing.
“Tiger King,” which tells the story of the life of Joseph Allen Maldonado-Passage, aka Joe Exotic, has been the breakout hit of the last couple of weeks. It has spawned online discussion, memes and opinion pieces. Not to mention, a huge viewership.
Netflix may also have a lot to say about its streaming rivals, which have been ramping up.
Airline earnings
This has been the worst time ever for airlines. A virtual halt of air traffic has crushed sales, and this week investors will start to see just how bad the damage is.
The losses will be narrower than in the current quarter, because travel wasn’t hurt nearly as badly in January as it was in February and March — and US flights were still strong in February.
But March traffic ground to a near halt. The guidance for the second quarter could be even worse.
Earlier this month Delta CEO Ed Bastian told airline employees that the carrier expects revenue to be down 90% in the second quarter and that the industry has yet to see a bottom of the crisis.