The Netflix 2020 Case: In Crisis

The Netflix 2020 case: in crisis

In April 2020, an article was published on the Business Insider page talking about how Netflix had demolished the growth objectives in Q1 with 15.8 million new subscribers, in this way, doubling Wall Street estimates. Those 15.8 million subscribers paid worldwide have been the highest number that has been obtained in a single quarter.

This exceeded its growth target 50% during its first quarter and destroyed the expectations of stretching of the period. Period income exceeded expectations at $ 5.8 billion. Although almost all film production has stopped worldwide, many people around the world turned to Netflix to entertain themselves during quarantine. More than half of Netflix’s income during this period came from the outside of the United States and Canada.

Netflix reported earnings of $ 1.57 per share, below $ 1.64 estimated by earning analysts per action. The company’s shares were shot during the hours after negotiation and remained unchanged. Netflix shares increased 35% this year thanks to the fact that people see more series and movies.

Netflix has been a success in the media sector lately, since practicing social distancing threatens media operations such as shows, theaters and film productions. It is said that product equipment has not been affected by the global crisis, since their customer service group faced the greatest demand during the quarter of this year and that their content production teams have faced stops in stops in the production.

The company said that the value of the US dollar increased compared to other currencies and this affected the growth of its international income.

Although Netflix marked its strongest quarter for the growth of subscribers, it also warned that the current crisis hinders the orientation of the future, it is not known what to expect. The company predicted that 7 are added.5 million subscribers in the second semester, but the estimate is simply an assumption. The growth of the subscribers could decrease while people get out of the blockade and it is not clear when it will be safe to resume physical productions. In the last month, Netflix has dropped 17%compared to its competitors: Comcast (24%), Viacom (66%) and Disney (38%).

An economic variable of great importance for Netflix is ​​the fluctuations of change that affect different countries, that is, the variation of the values ​​(rises and descent) of the macroeconomic indicators with respect to the previous period and the degree of acceptance of the electronic payment, which For example, in Latin American countries, it is very low. Netflix’s demand has changed in recent months due to factors such as: the number of consumers, that is, market size, since when there is more market there is more demand. It has also changed because there is a change in customer preferences, increases the valuation that each person gives to this service. 

Finally, there is a change in income and income because wealth grows while demand grows. Some analysts say that Netflix, taking into account their number of productions and global presence, locate the platform in an advantageous position to pass this world pandemic.