Streaming giant Netflix added 15.8 million paying subscribers between January and March, as global coronavirus lockdown measures helped it more than double its own pre-pandemic forecasts.
It brings Netflix’s total paid subscriber count to 182.86 million, further cementing its position as the world’s largest streaming service.
Revenue for the quarter came in at $5.77bn versus analyst estimates of $5.76bn. Earnings per share stood at $1.57, falling below analyst expectations of $1.65.
Netflix has proved to be one of the pandemic winners, with its share price up 32% since the start of the year. The S&P 500, by contrast, is down 16% for the same period.
Investing.com senior analyst Haris Anwar told Reuters that Netflix’s subscriber gains showed “it’s the ultimate stay-at-home stock”, but cautioned the spike is likely to be short-lived.
Johan Roslund, vice president of asset management at investment firm GP Bullhound, told Verdict that Netflix’s results “come as no surprise”.
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“The streaming industry is one of the few entertainment avenues left to people around the world who have dramatically boosted their stay-at-home time because of Covid-19 containment measures,” he said.
Netflix share prices are up 1.5% since it released its latest earnings yesterday after the close of the bell.
Netflix subscriber surge: Will it continue?
Despite the largely positive earnings report, Netflix acknowledged that its pandemic-fuelled growth was unlikely to last long.
“We expect viewing to decline and membership growth to decelerate as home confinement ends,” Netflix said in a letter to shareholders.
It has forecast that it will add 7.5 million subscribers for the next quarter, ending June.
Netflix also faces growing competition from rivals Amazon Video, Apple TV and Disney+, with the latter gaining 50 million subscribers in just five months.
“Despite the current viewing boom, however, Netflix is likely to be hit by the shutdown in filming, which will impact content slates for 2021,” said Roslund.
“While the growing usage and subscription numbers are impressive, it’s also key to keep in mind that the increased global viewership will put Netflix’s digital infrastructure under pressure, and they will need to adjust over time.”
The pandemic is also affecting the production of Netlfix original content, which Maria Rua Aguete, technology fellow and executive director of media, service providers, and platforms at tech research firm Omdia, points out as a “key selling point” for the streaming company.
“Netflix has a stockpile of content and will deliver the vast majority of its Q2 slate, however if action is not taken, content for later in the year could be severely impacted, with a knock-on effect on subscribers in Q4,” she said.
A widely expected recession caused by the pandemic could also see households cut non-essential outgoings such as streaming services.