Netflix stock soars despite some analysts’ long-term COVID-19 concerns

Netflix remote control image
During the fourth quarter, Netflix added 8.76 million new streaming subscribers worldwide – bringing its total to 167 million. (Pixabay/Creative Commons)

Netflix stock is again trending up today, up nearly 5% as of 11 a.m. EST and pushing the streamer’s market cap past $196 billion.

As Variety pointed out Wednesday, Netflix is now more valuable than Disney. With most Americans under stay at home orders and watching a lot more streaming video content, analysts are boosting their targets for Netflix.

Morgan Stanley raised its price target from $400 to $450. Benjamin Swinburne said that some Netflix competitors’ reliance on advertising – which has declined during the COVID-19 crisis – could hurt them in terms of content investment. However, Netflix has been spending big on content for years and “so this bull market has ended with Netflix's lead intact and perhaps insurmountable."

According to Seeking Alpha, Goldman Sachs expects Netflix next week to report record subscriber growth and provide strong guidance for 2020.

RELATED: YouTube, Netflix scale back to SD in Europe as coronavirus clogs networks

Not all analysts are as optimistic about Netflix in the near-term. Wedbush analyst Michael Pachter said that Netflix will likely continue burning cash at a substantial rate but COVID-related production pauses could seriously limit the influx of new content for Netflix and could lead to elevated churn later this year.

During the fourth quarter, Netflix added 8.76 million new streaming subscribers worldwide – bringing its total to 167 million. The company forecast another 7 million subscriber additions in the first quarter. Some analysts have said that forecast may be conservative now.

Pivotal Research expects Netflix will add 8.45 million new subscribers during the first quarter. “We believe the unfortunate COVID-19 situation is cementing NFLX’s global [direct-to-consumer] dominance partly driven by the incremental content spend that is enabled by their massive and growing subscriber base,” Wlodarczak wrote.

Canaccord Genuity said the increased demand for streaming entertainment and the lack of live sports will lead to Netflix total paid subscribers growing 16.5% this year, up from the firm’s previous estimate of 15.7%.

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AT&T is nearly five months out from the launch of HBO Max and the service still doesn’t have distribution agreements in place with Amazon or Roku.

As for content, audiences have primarily tuned into entertainment and news programming.

Disney may be sandbagging Hulu’s international expansion plans to avoid having to pay more to Comcast, which still owns one-third of the service.