Why Netflix’s Stock Took A Hit

Words by Retail Bum

Why Netflix's Stock Took A Hit
Why Netflix's Stock Took A Hit

In the absence of an active social life and live events and entertainment venues to go to, more consumers than ever are tuning into their Netflix account. Yet, that wasn’t enough to appease the stock market. 

The streaming platform’s shares took a dive on Thursday despite the company reporting positive earnings in Q2 2020. The company said that it added more than 10 million paid subscribers, two million higher than what analysts had expected. Meanwhile, the company’s revenue increased by 24.9 percent, reaching $6.15 billion in Q2, which was higher than the $6.08 billion analysts’ had estimated. 

While the stay at home mandates have catapulted Netflix’s position and revenue growth in the market, the Netflix expects its newfound momentum to slow down in Q3 with more companies furloughing their employees and states across the U.S. eventually relaxing their stay at home mandates. Still, many analysts feel positive about the company’s future prospects.  

“The pandemic and associated lockdowns have massively accelerated the shift from linear TV to streaming video,” said eMarketer analyst Eric Haggstrom. “Looking forward, even as lockdowns are relaxed and new competitors begin to scale their services, Netflix will extend its lead as the first stop for entertainment.”

By the end of 2020, Netflix expects its global user base to increase by 9.1 percent reaching 453.3 million subscribers.

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