Coronavirus Spread Benefits Netflix, Other ‘Stay-at-Home’ Companies, Analysts Say
By Todd Spangler
LOS ANGELES (Variety.com) – Amid fears over a global economic slowdown from the widening coronavirus outbreak, companies like Netflix that provide in-home services are best positioned to withstand the storm or even see upside from the crisis, according to industry analysts.
“is an obvious beneficiary if consumers stay home due to (COVID-19 virus) concerns, and this has been reflected in considerable stock price outperformance this week,” BMO Capital Market analyst Dan Salmon wrote in a research note Friday.
Netflix shares are up 0.8% this week through market close Thursday, amid the worst sell-off on Wall Street in nearly nine years over fears that a broader spread of the coronavirus may lead to a worldwide recession. The S&P 500 index has plunged 8.3% this week through Feb. 27.
In addition to Netflix, other tech companies catering to internet-connected consumers at home that could benefit from coronavirus include Facebook, Amazon, Peloton and Slack, according to MKM Partners analyst JC O’Hara. “We tried to identify what products/services/companies would potentially benefit in a world of quarantined individuals,” O’Hara wrote in a note Thursday, per CNBC . “What would people do if stuck inside all day?”
Earlier this week Perry Sook, CEO of TV giant Nexstar Media Group, also put a positive spin on how coronavirus could affect his business. Nexstar is the largest owner of broadcast TV stations in the U.S. after acquiring Tribune Media last year , with a footprint spanning 197 stations and digital multicast networks in 115 markets.
If coronavirus cases become “more widespread in the United States, and there’s more quarantine in home and all of that, then it could potentially benefit our business because we’d be the primary source of entertainment,” Sook said on Nexstar’s Feb. 26 earnings call when asked about the potential financial impact of the virus.
To date, there have been 83,704 confirmed cases of coronavirus infection and 2,859 deaths, the majority in mainland China, according to the Johns Hopkins Center for Systems Science and Engineering’s coronavirus tracker .
Other analysts have identified home-entertainment providers as seeing a potential silver lining from a wider spread of the virus. “If the contagion became more internationally widespread but short of panic, more people are likely to seek home entertainment options such as from companies like Comcast and AT&T, and streaming TV shows and films from Netflix, Disney Plus, Comcast’s Peacock, AT&T’s HBO Max and others,” Moody’s Investors Services analysts led by Neil Begley commented in a Jan. 29 report.
Companies feeling the most immediate impact from the pandemic have been those with direct exposure to China’s manufacturing sector, as well as travel and tourism industries. Earlier this month, Apple warned investors it would miss revenue estimates for the March 2020 quarter , citing slowdowns in its iPhone supply chain and lower sales in China due to the virus outbreak.
Apple CEO Tim Cook suggested that the worst is over in an interview with Fox Business Network Thursday. “It feels to me that China is getting the coronavirus under control. You look at the numbers, they’re coming down day by day by day,” Cook said. “And so I’m very optimistic there.”
Among the latest coronavirus-related disruptions, Facebook canceled its F8 2020 developers conference and Disney announced that it will shut down its Tokyo Disneyland and Tokyo DisneySea theme parks for two weeks as a precautionary measure. Meanwhile, K-pop sensations BTS have axed their scheduled April concerts in South Korea over coronavirus concerns, and Green Day have canceled Asia tour dates . Organizers of the Geneva International Motor Show canceled the event that had been scheduled for next month after a government edict banning gatherings of 1,000 or more people until mid-March.
