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.

Sponsored by Google Cloud

Webinar: Remote Post Production In The Cloud

Video production companies across the world have traditionally been tethered to physical facilities, but with the advent of covid-19, remote post production capabilities are more important than ever. Join this webinar to learn more about how video producers can utilize Google Cloud infrastructure, along with partner applications, to develop a remote post production suite that brings your artists and editors together, no matter where they are.

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

Executives at the OTT services Fubo, Xumo and Philo offered contrasting suggestions about how to avoid getting swamped by programming costs

Alan Wolk, co-founder and lead analyst at TV[R]EV, explores Peacock's hot start and questions HBO Max's new engagement statistics.

Charter made a lot of people do a double take when it reported positive video subscriber growth this morning, something it hasn’t done in years.