Sees growth reverting back to levels similar to pre-COVID as the world recovers, and sees paid net adds likely to be down year over year in 1h 2021 as compared to the big spike in paid net adds in 1h 2020
Sees 2021 free cash flow be -$1 billion to break-even
As productions increasingly restart, we expect Q4’20 FCF to be slightly negative and therefore, for the full year 2020, we forecast FCF to be approximately $2 billion, up from our prior expectation of break-even to positive
With $8.4 billion in cash on our balance sheet at the end of the quarter plus our $750m credit facility which is undrawn, our need for external financing is diminishing
Netflix is running a capital-intensive model that is entirely dependent on growth. It got a significant boost in subscriptions from the pandemic but in an increasingly crowded competitive space the ability to continue to sustain growth has to be questionable.
We cancelled our Netflix subscription a few months ago and don’t miss it. We still have both HBO Max and Hulu. Our recent iPad purchase also came with a year of free Apple TV. We have not yet tried Disney+ and Amazon Prime’s offering comes as part of the membership. These services all represent significant competition within the company’s home market which is why Netflix is depending so heavily on international growth.
The share has pulled back from the $550 area on a few occasions over since July and a sustained move above that level would be required to reassert demand dominance.
Disney has betting the fate of the company on the success of its streaming service. The share is holding in the region of the trend mean and will need to hold $120 if the recovery is to remain consistent.