NETFLIX stock: booming; for how long?

NETFLIX stock: booming; for how long?

2020-04-24 • Dikemaskini

Rise amid crisis

The daily chart below shows the performance of Netflix stock price since August last year. Its confident rise was checked by the virus but wasn’t stopped. The hit came right after the price renewed its summer highs at $390 per share. After, it lost 25% of its value and in the first week of March it was $290. Eventually, however, it recovered all those losses and reached to $450 just recently. That mark continues the uptrend the stock was following since August.

NETFLIXDaily 22.png

Situational fundamental factors supported the stock even more. People staying at home need to entertain themselves – what can be better than Netflix then? Bloomberg agrees with that and finds no problem explaining the outstanding results of Q1 2020 by the same logic. The contrast becomes most apparent amid the surrounding failures reported across the board.

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Source: Blooomberg

But the question is: is this success a war trophy or it will prove to be a solid mark in long-term advance?

Concerns

Financially, observers comment that the absence of sustained free-cash-flow is a problem for Netflix, and it will stay one of the major obstacles for the company to gain full trust from investors. Currently, the company is working to use the situation and convert it into strategic gains: enjoying high demand from the public, it borrows another $1bln to boost corporate content expansion. These and other measures will only be checked with time as Netflix itself is cautious to announce victory. Almost 16mln additional subscribers may well turn into a “nice episode” of a sudden gift of destiny if the growth is not carried on into the following months. We will discover soon enough.

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