Netflix Inc. shares moved to an all-time high Wednesday on expectations that the company is becoming a stronger force in streaming as the COVID-19 outbreak keeps people confined to their homes.
Netflix NFLX, +3.19% shares rose 3.2% in Wednesday’s session to end the day at $426.75, topping the July 9, 2018 record high of $418.97. Netflix was one of only 30 S&P 500 SPX, -2.20% components to gain in the first quarter as the coronavirus spread across the globe; the stock has added 33% so far this year as the S&P 500 has dropped 14%.
Netflix joins fellow FANG stock Amazon.com Inc. AMZN, +1.06%, which hit a record high in Tuesday’s session before gaining another 1.1% Wednesday. Both businesses are seen as relatively resilient during the pandemic as they play into the stay-at-home trend.
“We believe the unfortunate COVID-19 situation is cementing Netflix’s global [direct-to-consumer] dominance partly driven by the incremental content spend that is enabled by their massive and growing subscriber base,” wrote Pivotal Research Group analyst Jeff Wlodarczak, who raised his price target on Netflix’s stock to a new Street high of $490 on Wednesday.
The coronavirus outbreak presents an opportunity for Netflix to introduce new users to its service and broaden the appeal of streaming over the long run, according to Monness, Crespi, Hardt & Co.’s Brian White.
“Even after this crisis is over, the thought of returning to a packed theater to watch a new movie release is an experience that most people are likely to avoid for the foreseeable future,” he wrote in a Wednesday note to clients.
Netflix’s stock has held up far better during the COVID-19 outbreak than Walt Disney Co.’s DIS, -2.50% , even as the streaming newcomer has seen explosive growth with its Disney+ service, reaching 50 million subscribers in less than five months. That streaming momentum must be balanced against theme-park closures and challenges for the company’s traditional media brands.
Investors will get a better sense of how Netflix has fared in recent months when the company delivers its first-quarter results Tuesday. Analysts surveyed by FactSet expect that the company earned $1.61 a share for the period on revenue of $5.73 billion, while adding 7.8 million net new paying subscribers globally, higher than Netflix’s forecast of 7 million.
Originally Published on MarketWatch
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