Netflix Stock Buoyed By Hit Shows, Positive Usage Trends

Internet television network Netflix (NFLX) is showing strength even as governments begin lifting stay-at-home rules following the coronavirus pandemic. Netflix stock received an upbeat report from investment bank JPMorgan late Wednesday.


Recent data suggests stable daily active users and app downloads for Netflix, JPMorgan analyst Doug Anmuth said in a note to clients. This comes after a surge in usage for streaming video services while consumers sheltered in place during the Covid-19 scare.

Anmuth kept his overweight rating on Netflix stock with a price target of 535.

On the stock market today, Netflix stock fell 2.1% to 425.56 during a brutal down day for the overall market. Earlier in the session, it rose as much as 2.6% to 445.57.

Netflix Stock Bounced Off 50-Day Line

Netflix stock hit a record high of 458.97 on May 19 but it pulled back as investors rotated out of stay-at-home stock plays. It found support at its 50-day moving average line before surging higher this week. The stock remains in a secondary buy area from this show of support.

Growth in daily active users for Netflix remains elevated from pre-Covid-19 levels, Anmuth said. It has been stable for about six weeks at about 20% year over year, “suggesting strong engagement continues,” he said.

User growth in the U.S. and Canada as well as Asia Pacific remains elevated, he said. Meanwhile, growth in Europe and Latin America has returned to pre-pandemic levels.

App download growth also remains elevated from precrisis levels for Netflix, but has receded from recent highs, he said. Download growth is especially strong in the Asia Pacific region, partly due to the success of recently launched mobile-only plans in the Philippines and Thailand, he said. Also, Netflix is continuing to see traction in India, Indonesia and Malaysia, Anmuth said.

‘Space Force’ Among Recent Hit Shows

Driving the user growth is content that is resonating with viewers, he said.

In the U.S., recent hit titles include comedy series “Space Force,” true-crime documentary “Jeffrey Epstein: Filthy Rich” and romance drama “Sweet Magnolias.”

“Netflix is a key beneficiary and driver of the ongoing disruption of linear TV, with the company’s content performing well globally and driving a virtuous circle of strong subscriber growth, more revenue, and growing profit,” Anmuth said.

Netflix competes in the subscription video-on-demand market with Walt Disney’s (DIS) Disney+,’s (AMZN) Prime Video, Hulu and others.

Netflix stock ranks No. 11 on the IBD 50 list of top-performing growth stocks.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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