- There are plenty of conventional reasons right now to be long Netflix in 2020. Subscriber growth. Content. Binge time.
- But there are some stranger things boosting Netflix stock this year:
- The Wuhan coronavirus, global warming, and Tesla.
Netflix (NASDAQ:NFLX) stock is hot again after beating Wall Street expectations for subscriber growth in the fourth quarter. NFLX price had stalled over the past week. But it surged Thursday when Comcast announced an exponential drop in streaming content subscribers.
Helping the rally along, Netflix reported this week that it added 8.76 million subscribers worldwide in quarter four. Global subscriber growth crushed expectations. Last quarter, investors and Netflix short sellers doubted the company’s prospects. Because a flood of competitors like Apple and Disney entered the streaming market.
But Netflix remains unscathed so far.
And binge time per subscriber grew in the fourth quarter as well:
The average Netflix subscriber watched more Netflix this fourth quarter, both globally and in the U.S., than in the same quarter a year ago.
This blasted a wide hole in the thesis that on-demand video consumers would watch less Netflix. Analysts thought they would try out the new streaming services.
Chalk it up to Netflix original content. The third season of Netflix’s “The Crown” saw its audience grow an annual 40% over the second season. And “The Witcher” dethroned the Mandalorian as the most watched TV show worldwide.
But here are some strange headwinds for Netflix stock.
Coronavirus Could Boost Netflix Viewers in China
A TDAmeritrade network anchor tweeted an interesting screenshot from his Bloomberg terminal Thursday. It had some strange analysis –that makes a lot of sense:
Netflix inc. could find itself the unusual benefactor to an outbreak of a SARS-like virus in China if moviegoers in the region opt to break the tradition of going to theaters during the lunar new year and binge-watch Netflix instead.
The coronvirus continues to spread, and the death toll is climbing. It’s entirely plausible that people will spend more time indoors as a result. Moreover, we’ve already seen a measurable coronavirus effect on video game sales in China.
MKM Partners predicted the viral disruption in China. They made the right call on NFLX in Jan 2018, while the rest of Wall Street was bearish.
Climate Change Might Help Netflix
Global warming is heating up the planet. But Netflix and chill is a way to stay cool. 2019 was the second hottest year on record. And 2020 is projected to be another hottest year on record. In addition, climate change is making the world rainier.
The U.S. just had its 12 wettest months on record, and experts expect the trend to intensify. Blazing temperatures and pouring rain will lead people to stay inside. Instead of playing Pokemon Go, they’ll browse Netflix for a good series to binge.
Don’t Forget About Tesla’s Self-Driving Cars
If you’re long Tesla (NASDAQ:TSLA), that’s a good reason to be long NFLX. As Tesla stock continues its rise, the company just reached the $100 billion milestone. And its Autopilot feature is getting more refined every day.
Fully autonomous vehicles are said to be around the corner. And when they reach mass adoption, it will unleash a flood of found time. Which people will use to watch Netflix on long road trips and during the daily work commute.
Disclaimer: The opinions in this article do not represent investment or trading advice from CCN.com.
Last modified: September 23, 2020 1:31 PM