3 Stocks in Focus as Streaming Services Gain on Coronavirus Crisis
On Jul 16, Netflix, Inc. NFLX released second-quarter subscriber figures, which exceeded its own projections. The streaming giant added more than 10 million subscribers from April through June. Needless to say, Netflix seems to be one of the biggest beneficiaries of the COVID-19 pandemic.
Video streaming apps, social media and chatting platforms, video conferencing and online delivery apps have gained traction over the past few months as the coronavirus pandemic locked most people indoors. With restriction on traveling and social-distancing measures in place, online streaming apps are witnessing a surge in users.
Netflix Shows the Way
Netflix gained 10.1 million paying customers in the second quarter, beating its own estimates of 7.5 million. It has added a total of 26 million new subscribers in 2020.In contrast, it saw 28 million new subscribers for the whole of 2019.
The company’s revenues increased almost 25% to $6.1 billion, while profits jumped to $720 million in the second quarter, up from $271 million a year ago. Also, the company expects to add another 6.8 million subscribers in the third quarter. The jump in subscribers may be impressive but Netflix also warned that it expects fewer new subscribers once the home confinement ends.
COVID-19 Helping Streaming Services
Streaming video usage is surging with not too many entertainment options. This was seen in the last quarter too when Netflix’s added a staggering 15.77 million new subscribers. Not only Netflix, other streaming services too have been cashing in on the coronavirus crisis. The Walt Disney Company DIS, which launched only in November 2019, added 50 million subscribers by April thanks to the coronavirus-led lockdown.
Moreover, most streaming service providers have lined up an array of content to lure in subscribers. Needless to say, the universe of indoor gaming, e-sports and streaming shows has attracted significant attention owing to the segment’s ability to offer an impressive mode of entertainment. According to a recent report by Grand View Research, the global video streaming market size was valued at $42.6 billion in 2019 and is projected to witness a CAGR of 20.4% between 2020 and 2027.
Stocks in Focus
Streaming services are one of the rare few to be benefiting from the coronavirus pandemic. Here are a few Zacks Rank #3 (Hold) video and music streaming stocks to watch out for in the current scenario. You can see the complete list of today’s Zacks #1 Rank stocks here.
Netflix definitely has been one of the biggest gainers during the coronavirus pandemic. It is considered a pioneer in the streaming space and has been spending aggressively on building an original portfolio. This month alone, Netflix is set to release 59 new TV seasons, movies and documentaries, among others.
The company’s expected earnings growth rate for the current year is 55.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days.
Amazon.com, Inc. AMZN besides being an e-commerce giant offers several other services. Amazon Prime, a membership program, provides access to streaming of movies, TV episodes and other services, and is one of the market leaders in the streaming space.
The company’s expected earnings growth rate for the next year is 92%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days.
Comcast Corporation CMCSA is the latest entrant in the video streaming market with the launch of NBCUniversal’s Peacock last week. With over 20,000 hours of content, Peacock includes a mix of NBC series, sports, news and original shows, such as the dystopian drama Brave New World and documentary In Deep with Ryan Lochte.
The company’s expected earnings growth rate for the next year is 25.2%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 30 days.
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