Despite U.S. market fears over oil, Netflix surpassed analysts’ expectations in its Q1 earnings report.
The company reported revenues of US$5.77 billion [AUS$9.11 billion], earnings per share of US$1.57, and 15.77 million new subscribers.
According to CNBC, the company noted that the jump in subscriber numbers was directly attributed to the coronavirus pandemic which compelled people to stay in their homes.
In the same letter, the company also mentioned how the coronavirus crisis continues to impact its business:
- First, temporarily higher viewing and increased membership growth due to home confinement;
- second, a forecast of a decrease in international revenue growth caused by the U.S. dollar appreciation;
- and last, suspension of productions across the world in response to government lockdowns and guidance from local public health officials.
Cord-cutting in live sports causes influx
Sports such as the National Basketball Association (NBA) and National Hockey League (NHL) have suspended their seasons due to the ongoing coronavirus pandemic.
This has reportedly caused a surge in cord-cutting, where subscribers cancel subscriptions to multiple channels in favor of other options, such as streaming services.
With the subscriptions in streaming sites doubling primarily due to home quarantine, Ben Silverman, CEO and chairman of production company Propagate, commented on the lack of sporting events, telling CNBC:
“The longer that we don’t have sports, the more accelerating the cord-cutting will be […] I think the sports was what was having people hold on to their traditional packages, and without it they’re discovering a lot of entertainment choices in streaming and at lower costs.”
Silverman also added that reruns will dry up a certain point as subscribers may have to wait longer for new shows to come out because of production delays.
However, according to Netflix CEO Reed Hastings, the sudden surge in “viewership and subscriber growth” is likely temporary. The numbers are expected to slow down once the coronavirus restrictions are lifted.
Other companies’ earnings may influence Dow Jones
Aside from Netflix, many other companies reported significant movements in their stocks. These include the following:
- Snap — the social media platform’s shares flew 18%.
- Chipotle Mexican Grill — this restaurant chain’s shares went up 4%.
- Texas Instruments — the semiconductor industry’s stock jumped 2% in extended trading after beating analysts’ estimates. TI reported revenues of $3.33 billion, versus the $3.17 billion analysts’ forecast, according to Refinitiv.
On the other hand, there were also stocks in extended trading hours that did not respond well mostly based on its first-quarter earnings report:
- Interactive Brokers Group — this electronic broker company dropped 6% after reporting its first-quarter financials with a revenue of $532 million, versus the analysts’ expected $563 million, according to Refinitiv.
- United Airlines — the shares dipped 2% after it announced a stock offering as an additional measure the company is taking to offset the negative impact of COVID-19, creating chaos on the travel industry.
- Navient — the asset management company’s stock fell 3% after it reported first-quarter financial results, with a posting first-quarter net interest income of $132 million. This data is compared to Factset’s data of $146 million from the same period a year ago.