Netflix (NASDAQ: NFLX) stock ended the last week down -6.19%, even with a positive earnings report behind it. Investors, responding to wider economic concerns and a general decline in market confidence, let go of the stock at a significantly higher price than its 52-week low.
While short-term sellers no-doubt benefitted from large gains, anyone interested in the streaming market over the long-term should consider holding this stock, even if the market continues to pull back.
Here are the reasons why.
Netflix is Better Positioned than its Peers
To say that Netflix has peers is something of a bold statement. While there are other players in the streaming market (notably Disney and Apple), no company has the reach, brand presence, or subscriber numbers that Netflix does.
Netflix currently has more than 192.95 million subscribers. Disney+ is the platform that has the biggest shot at challenging Netflix, and it is only expected to grow to 90 million subscribers in 2024.
With a larger subscriber base, Netflix can generate more revenue, which can be put back into shareholder returns and the streaming content that will drive the platform forward.
Netflix isn’t completely profitable on the bottom line, but it doesn’t need to be at this stage of its growth. If thinking purely in the sense of a mid-term ‘winner’ in the streaming market, Netflix is the closest fit by a wide margin.
Netflix Has Its Content Taken Care Of
With sweeping economic shutdowns in the United States and throughout much of the world where movies are made, developing content will be difficult in the coming months. While streaming providers have a large catalog of older properties that they can offer, creating new shows and films in the meantime will be challenging.
Netflix has an advantage in this area because it has already developed its programming content for 2020. The global Coronavirus Pandemic hasn’t slowed Netflix’s release schedule, and this will help to keep subscribers on the platform, while also attracting new ones.
The Earnings Report Gave Plenty of Good Takeaways
Netflix released its earnings last week. It generated $6.15 billion in revenue during the most recent quarter, beating the average analyst estimate of $6.08 billion. It was a 25% increase over the year-ago quarter. The company also added 10.09 million new subscribers, significantly beating the average estimate of 7.5 million.
Streaming is still growing at a rapid rate, and the stock movement doesn’t reflect its success. If looking at the numbers alone, this is the most promising streaming stock on the market.
Many investors will be tempted to sell at today’s price, especially those who purchased the stock before 2019. However, those with growth-focused portfolios should consider holding, as the real value is likely to be seen in a post-COVID19 environment. This is a powerful streaming stock for a new generation of media, and it remains one of the best picks today.
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