By Dan Gallagher 

Give Netflix credit for putting the bad news up front. For the streaming giant's first-quarter results, there was actually very little of it.

On Monday afternoon, Netflix reported an unprecedented surge in net new subscribers for the first quarter. Nearly 15.8 million signed up for the company's streaming service during the period, which was more than double the seven million additions Netflix had projected three months ago. The company also projected adding another 7.5 million new subscribers for the second quarter -- well ahead of the 5.6 million analysts were expecting, according to FactSet.

It was a bittersweet win, though, coming during a pandemic that has confined people to their homes. Streaming entertainment is one of the few growth markets in such an environment, as evidenced by strong streaming data reported earlier by Walt Disney Co. and Roku. But investors hoping for a big number had already bid up Netflix shares by 34% this year -- the biggest gain by far for any company on the S&P 500 with a market capitalization exceeding $100 billion.

Netflix's tone wasn't entirely upbeat. In its letter to shareholders the company said that it expects viewing and membership growth "to decelerate as home confinement ends, which we hope is soon." It also noted that its pipeline of new content has been affected by the shutdown of TV and movie production, with the silver lining that its cash burn will slow for now. Netflix shares fell slightly following the results.

Netflix still holds a commanding lead in the streaming market and is unlikely to be toppled by the raft of new competitors. The company has also built up a strong library of content and shown a sharp eye for tapping into the zeitgeist. The docudrama series "Tiger King" launched in mid-March just as lockdowns sent people home. That show became water-cooler conversation at a time when no one could gather around water coolers anymore. Netflix knows all too well the value of being in the right place at the right time.

Write to Dan Gallagher at dan.gallagher@wsj.com

 

(END) Dow Jones Newswires

April 21, 2020 18:14 ET (22:14 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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