Netflix Inc (NFLX) increased subscriber numbers dramatically in 2020 due to the ongoing COVID-19 pandemic. Although social activity may return to normal in a few quarters and demand for home entertainment may drop this year, the Company expects a slight stabilization of demand.
The short-term growth of Netflix’s customer base is expected to be slower. Therefore, Netflix added 26 million users in the first six months of 2020. Still, the number of subscribers increased only by 2.2 million in the third quarter versus a total of 6.8 million a year earlier. About 6 million new subscribers are expected to join the Company during the fourth quarter. Again, this will be a decrease from the 8.8 million new subscribers who came on board during the fourth quarter of last year.
Netflix Inc (NFLX) has gathered more than 200 million subscribers in 2020 despite a slowdown in the last two quarters. It has been observed that during the holiday season, interest in video has been high due to new projects. The Company expects an increase in average watch time and a reduction in the number of blackouts thanks to its success in the last quarter.
Netflix’s cash flow has been positive in the past quarters during the COVID-19 pandemic, and this was due to a decrease in investment in content creation. Production of new films and TV shows is expected to increase, thereby resulting in a negative cash flow forecast in the fourth quarter. However, Netflix can break even in the fiscal year 2021, before generating sufficient cash flow annually.
In the first half of 2021, Netflix Inc (NFLX) management anticipates customer growth will slow before returning to normal levels. However, there are significant consumer behavior changes that make it difficult to predict precisely what this decline will be.
Although Netflix intends to create new original content that will attract millions of viewers to the service, its commitment to maintaining a commitment to producing unique and original content that will be attractive will remain unchanged.
Over the past 12 months, Netflix Inc (NFLX) shares have gained more than 45%. Since the beginning of this year, NFLX has fallen more than 7%.
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