Deeper Dive—Is Netflix stock getting a boost as coronavirus concerns grow?

Netflix sign Los Gatos
MKM Partners told CNBC it expects other companies including Amazon, Facebook and Peloton to benefit from being able to reach consumers in their homes as they avoid potential coronavirus contact. (Netflix)

Concerns about the spread of the coronavirus have dominated news cycles and caused the U.S. stock market to fall. Netflix shares, however, are growing amid the turmoil.

Netflix stock has risen more than 5% this week while the S&P 500 is down about 9% – and is heading toward its worst week in more than a decade. It’s a big enough discrepancy that some are wondering if Netflix is going up for the same reason that other stocks are going down.

Crain’s said stocks like Empire State Realty, Six Flags Entertainment and SeaWorld Entertainment could be falling due to the conclusion that coronavirus concerns will cause tourists to skip out on doing tourist-y things like visiting theme parks and landmarks like the Empire State Building.

WHITEPAPER

How To Lower the Cost of Ownership of Your Cable Access Network

This white paper presents a cost analysis of a virtualized cable modem termination system (CMTS) deployed in a distributed access architecture (DAA). Learn how to eliminate traditional CMTS constraints, efficiently enhance your network performance and more.

By that logic, the stock market is suggesting that people will stay in and watch Netflix instead of venturing out. Of course, Netflix probably wouldn’t be the only media stock to benefit. Disney – which runs Disney+, ESPN+ and Hulu – could also be in place for a stock boost.

Craig Huber, CEO and managing director for Huber Research Partners, told Fox Business that the coronavirus could boost all OTT streaming services.

“If this coronavirus issue picks up steam a lot more than it has already and a lot of people aren’t leaving their homes or are fearful to leave their homes, it may be more likely to buy an over-the-top media subscription or pull like Netflix or a Disney+ or what have you,” Huber told the publication. "If you’re trapped at home you probably watch more television. And it might lead to more OTT signups, digital signups and stuff.”

Disney’s stock is not trending in the same direction as Netflix’s; it’s down nearly 10% this week. Much of that decline could likely be attributed to the surprise announcement that CEO Bob Iger is stepping down, but Disney also relies on revenues from theatrical releases, theme parks and hotels.

MKM Partners told CNBC it expects other companies including Amazon, Facebook and Peloton to benefit from being able to reach consumers in their homes as they avoid potential coronavirus contact.

“There are obvious areas in the market where carnage continues to run rampant,” MKM’s JC O’Hara told the publication. “Rather than attempting to forecast how much lower these stocks may go, we decided to explore which stocks may hold up better in the face of COVID-19.”

The firm also listed Activision Blizzard, Nexstar Media and the New York Times on its “Stay at Home” index.

It’s unclear how the spread of the coronavirus could impact life in the U.S. over the months ahead and it’s slightly morbid to speculate on how a potentially life-threatening illness might benefit the streaming video industry. The focus now for the U.S. and the rest of the world needs to be keeping people safe, which may mean staying home and watching Netflix.

Suggested Articles

WarnerMedia scored a key HBO Max distribution deal with Comcast just as it launched in May. Nearly six months later, there still isn’t an app.

Peacock, NBCUniversal’s recently launched streaming video service, is rolling out 20% discounts on annual Premium subscriptions for Black Friday.

How can we defend ourselves? Mostly, it’s a matter of common sense.