After Price Surge during the Pandemic, Netflix’s Stocks Move Towards Correction

19

At the beginning of 2021, Netflix had shared some promising stats and figures about its user base and revenue in the year 2020. According to the online streaming giant, it had gained enormous revenues as well as observed many active memberships.

Netflix currently has more than 73.94 million active users and the majority of the user base on the platform came during the pandemic. As people from all over the world were confined to their houses due to lockdowns and curfews, Netflix was the main source of entertainment.

This is the reason why Netflix’s membership count and revenue sharply increased and experienced all-time highs. However, as the pandemic is now getting under control all over the world and lockdowns are lifting off, Netflix is now experiencing a correction in terms of its stock prices.

This is because people have now started going back to their jobs and have started working from offices. In addition, people who wanted to travel but were limited because of travel bans have also started going back to their normal routines.

This is the reason why the subscription rate alongside the revenues for the company has slowed down significantly. According to the reports, Netflix has reported that in the first quarter of 2021, it only observed 4 million new subscribers joining the platform.

The number of subscribers achieved by Netflix in the first quarter of 2021 is 2 million less than what Netflix had added to their forecast, which was 6 million.

Netflix has also revealed that for the second quarter of 2021, it had expected only a million subscribers to join the platform.

On the other hand, in the second quarter of 2020, Netflix had reported that a total of 10 million new subscribers had joined its platform for online streaming.

Netflix has revealed that the majority of the users/subscribers who joined the streaming giant in 2020 were in the first 6 months of when the pandemic had hit the entire world.

During this period, Netflix reportedly saw more than 26 million subscribers join the platform. Netflix executives and analytical teams have admitted that they had not foreseen to observe such a surge in the memberships. The growth the company saw in the particular period was something no one could have predicted, to begin with.

However, given the developments in the fourth quarter of 2020 when the vaccines for coronavirus were distributed, it would have been wise for Netflix to experience a correct in the memberships.

Instead, Netflix went ahead and ended up overestimating the stats and predicted it would see about 6 million users in the first quarter of 2021 and 1 million in the second quarter respectively.

However, Netflix can consider this a breather as they are hoping that the third and fourth quarter of 2021 would bring in many users to the platform. Netflix has revealed there is a huge backlog of movies and series that were not made available due to the given circumstances.

Now that the situation is coming back to normal, it will start releasing the said content and see the members rise on the platform.