Netflix will soon report its second-quarter earnings and analysts are predicting another big quarter for the subscription service thanks to the coronavirus-related streaming surge.
Netflix blew away its subscriber growth forecasts for the first quarter after the coronavirus led to widespread shelter-in-place orders and drove accelerations in demand for streaming entertainment. The company originally predicted 7 million net subscriber additions but ended up adding 15.77 million new paid customers.
In April, Netflix guided toward 7.5 million global paid net additions in the second quarter but warned that “given the uncertainty on home confinement timing, this is mostly guesswork.” The company also warned that some of the lockdown growth will turn out to be pull-forward from its multi-year organic growth trend, resulting in slower growth after the lockdown is lifted country-by-country.
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Many U.S. states and international markets began lifting coronavirus restrictions near the end of the second quarter. Regardless of how that may have impacted Netflix’s overall growth, MoffettNathanson raised both its domestic and international subscriber forecasts for the company. The analyst firm now predicts Netflix will add 1.75 million domestic and approximately 7.9 million international paid subscribers.
For the full year, MoffettNathanson expects Netflix will grow its domestic subscribers by 5.7 million and its international subscribers by nearly 30 million.
The UBS Evidence Lab survey data also points to overall strong penetration and consumption trends with low levels of churn in the U.S. for Netflix. The analyst firm raised its second-quarter global net additions forecast to approximately 9 million (up from around 7.49 million) and its third-quarter global net additions forecast to approximately 5 million (up from around 3.9 million).
“…We expect both higher gross adds and lower churn across all regions given the ancillary benefits related to COVID-19 ‘stay-at-home’ orders,” wrote UBS analyst Eric Sheridan in a research note. “Looking out to Q3, we will look for mgmt commentary around upcoming title slate, featuring returning series & movie sequels.”