Netflix: Investors to Reap Massive Return as Paid Subscribers Boom

Netflix - cfamedia

Despite that coronavirus has, basically, grounded almost all the traditional mode of doing businesses, some tech companies are still enjoying massive returns and have seen their income, quadrupled, in the first quarter of the year.

Social media giants, like Twitter, LinkedIn, Instagram, Facebook, etc., have released reports that, there has been a spike, in the number of users on their platforms and this has shot up their incomes.

One other tech company that seems to be benefiting immensely from the stay at home protocol worldwide is, the popular American live streaming movies platform, Netflix.

In its quarterly report, the tech company revealed that, there has been a massive increase, in the number of paid subscribers, on the site, but also warned that, investors should not get their hopes high.

According to the report, the company’s paid subscribers have jumped to 15.5m new subscribers, in the first quarter of the year and this has translated to a total of 182.86 million.

The growth is almost double what was previously reported, before the COVID-19 pandemic, but, the reports states that, investors should not get their hopes high, as this spike might be a prelude, to another problem brewing, beyond the horizon.

“Our increase in net paid membership additions, may reflect the acceleration of growth that we would have seen, in subsequent periods and membership growth, may slow or reverse, due to slower acquisition and/or higher cancellations, as government and other restrictions are relaxed”, the document reads.

“In our 20+ year history, we have never seen a future, more uncertain or unsettling”, stated Reed Hastings, CEO, Netflix, in his letter, to the investors of Netflix.”

The aforementioned words, by the CEO, further express his concerns, about the future, which relates to the high surge of users.

There is the probability of the surge, causing a major dent, to the average revenue that is, normally generated.

Getting average revenue becomes harder. Hastings explained further that, the company generated $5.7 billion, while $958 million, was recorded as the operating cost, for the first quarter.

In spite of that, the spread of the virus has caused some major dent, in the production of movies and news shows that are not coming like before, the profit still rises.

Featured Image: askifa.ng

Don’t miss important articles during the week. Subscribe to cfamedia weekly digest for updates.