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Coronavirus Helps Netflix & Snap Gain Subscribers, Tech Rallies

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On Apr 21, Netflix, Inc. (NFLX - Free Report) released first-quarter subscriber figures, which more than doubled its projections. The streaming giant showed a significant uptick in new subscribers from January through March. Also, Snap, Inc. (SNAP - Free Report) on Tuesday said that its number of users grew in the first quarter. However, both Snap and Netflix’s recent boom started only in mid March.

Video streaming apps, social media and chatting platforms, video conferencing and online delivery apps have gained traction over the past few weeks as the coronavirus pandemic has kept most people locked inside their homes. With restriction on traveling and social distancing measures in place, online streaming apps are witnessing a surge in users.

Netflix, Snap Show the Way

Netflix gained 15.8 million paying customers in the first quarter, taking its global total to 182.9 million. The company had predicted that it would add around 7 million customers during the period. Netflix’s total revenues rose to $5.77 billion from $4.52 billion in fourth-quarter 2019. 

The video streaming giant also released figures on how many households watched some of its hit shows. Around 85 million households watched a minimum two minutes of its original movie Spenser Confidential, while 65 million households checked out Spanish language series La Casa de Papel, also known as Money Heist. Netflix has a Zacks Rank #2 (Buy) and soared 30.4% in the past month. The company’s expected earnings growth rate for the current year is 45.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Snap had an equally impressive first quarter. Daily active users of Snapchat jumped 20% to 229 million in the first quarter compared with a year earlier. The company’s fourth-quarter figures stood at 218 million. A rise in daily active users also helped the company sell more advertising on its app, which increased 44% from a year earlier to $462.47 million. Snapchat, which surged 23.3% in the past month, carries a Zacks Rank #3.

Tech Companies Cash in on Coronavirus Crisis

The jump in subscribers may be impressive but Netflix also warned that it expects fewer new subscribers once the home confinement ends between July and December compared with the prior-year period. Both Netflix and Snap’s users grew only in mid March when stay-at-home restrictions were well in place.

Earlier this month, The Walt Disney Company (DIS - Free Report) said that its streaming service Disney+ has crossed more than 50 million subscribers. Disney+ debuted five months ago and was launched in Europe and Asia only in March end and early April, respectively. As of Feb 3, it had 28.6 million subscribers, which almost doubled in a month. Shares of Disney gained 17% gained in the past month.

Tech is one of the rare sectors benefiting from the coronavirus pandemic, which has kept billions of people at home with nothing to do but stream.

Similarly, video and web conferencing service Zoom Video Communications, Inc. (ZM - Free Report) , despite being accused of data theft and security flaws, has become a hit during the coronavirus outbreak. The company said that its daily users ballooned to more than 200 million in March from a previous maximum total of 10 million. Zoom sports a Zacks Rank #1 and jumped 9.8% on the bourses in the past month. The company’s expected earnings growth rate for the current year is 22.9%.

On Apr 21, Apple, Inc. (AAPL - Free Report) said that it will be launching its music streaming service in 52 new countries, which means Apple Music will now be available in 167 markets. Apple already has more than 60 million subscribers and plans to take on Spotify Technology S.A. (SPOT - Free Report) , which has 120 million subscribers.

The announcement couldn’t have come at a better time given that more people are subscribing to music streaming services to overcome this stressful phase. Apple carries a Zacks Rank #3, while Spotify has a Zacks Rank #2. Apple and Spotify’s expected earnings growth rate for the current year is 2.3 and 9.6%, respectively. Past month gains are 17% for the Apple stock and 12% for Spotify.

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