The Covid-19 pandemic supported Netflix in strengthening its pace on the TV dial. The streaming company now needs to show that it can stay there in terms of profit.
Netflix was one of the first tech companies to display a well-defined belief from the pandemic. The company added a record-breaking 15.8 million net paid subscribers in last year’s initial quarter as the coronavirus outbreak sent people rushing home with not much else to do. Netflix will report first-quarter earnings on Tuesday, and the results are expected to seem tame by comparison, with both the company and Wall Street projecting roughly six million new paid subscribers.
The company has long warned that the pandemic pulled forward the growth of subscribers, which means comparisons will likely remain challenging all year. Wall Street currently expects Netflix to add roughly 25% lesser new paid subscribers this year than last, according to FactSet.
A slower-growing Netflix is only a real problem to an investor base that has come to value streaming services on subscriber additions alone. But at almost 204 million paid subscribers and climbing, Netflix is already way ahead of its competition on that score. And the company itself seems ready for a new story. It told investors in its final report that external financing to fund operations is unlikely to be necessary in the future. It also stated that it expects to break even on a cash-flow basis this year-after burning cash for the past eight.