Netflix Stock Tumbles As Net Paid Additions Decline 67% YoY

Summary

• Netflix (NASDAQ:NFLX) added 2.2 million subscribers in Q3 FY20, a 67.6 per cent fall year-over-year.
• Corus Entertainment (TSX:CJR.B) has announced a partnership with Duncan Studio, an L.A. based private animation firm, to produce original animated movies.
• Corus has rebounded over 48 per cent since the pandemic-led crash on March 24.

As the coronavirus pandemic forces people to stay indoors, the consumption of content on digital platforms has surged. Online streaming platforms such as Netflix (NASDAQ:NFLX or NFLX:US) and Amazon Prime (NASDAQ:AMZN AMZN:US) are seeing a rush of subscribers and hence, a rise in revenues. Over-the-top (OTT) businesses are coming out with original content to win more consumers and expand their subscription base. With theatres shut, these streaming platforms are offering filmmakers an option to release their movies digitally.

Netflix has managed to build a good Canadian subscriber’s base since its launch in 2011.  The company added one million subscribers within 10 months of its debut. By the end of 2019, it had nearly seven million subscribers in Canada — that is almost one-fifth of the country’s total population.

The Canadian government has already announced a C$50 million COVID-19 emergency fund to help local production houses weather these turbulent times. To understand the dynamic entertainment industry, let us analyze the following stocks: Netflix Inc and Corus Entertainment Inc. (TSX: CJR.B)

Netflix (NASDAQ:NFLX)

Current Stock Price: US$ 525.42

Netflix is an American online video streaming company. Its primary video on-demand service business is available across the world except China. Netflix provides original and outsourced digital video content to desktop, smart TVs, and consumer electronic devices.

In 2011, Netflix introduced three plans, DVD-only, DVD plus streaming plan, and online streaming for its subscribers. At the time, online streaming was its secondary operation. Since then, the company has swelled to magnus proportions, earning a spot in the big tech FAANG stocks.

The online entertainment company reported U$1.74 earnings per share (EPS) in the third quarter of 2020.

Netflix’s posted total revenue of US$ 6.44 billion in Q3 FY20. The streaming giant added 2.2 million new subscribers in Q3 FY20, approximately 67.6 per cent decline, compared to 6.8 million subscribers in the same quarter of the last fiscal year. The stock tumbled almost 6 per cent after missing the estimates in Q3, 2020.

Netflix Stock Performance

Netflix share price has grown over 24 per cent in the last six months. The stock has zoomed almost 78 per cent since the pandemic-led crash on March 17. The company scrips reported a nearly 62 per cent increase year-to-date (YTD). The average trading volume of the stock is 6.5 million over the last 10 days. Netflix’s current market capitalization is US$ 231.7 billion.

Netflix's Year-To-Date Stock Performance Chart / Source: EODHD/Others, Thomson Reuters

The company has not paid any dividend to its shareholders till date. The company’s earnings per share (EPS) is C$ 5.93. Its price-to-earnings ratio is 89.5, and the price-to-book ratio is 24.8. Netflix’s return on equity (ROE) is nearly 35 per cent. Its price-to-cashflow ratio is 1559.7.

Corus Entertainment Inc. (TSX: CJR.B)

Current Stock Price: C$ 2.95

Toronto-based Corus Entertainment Inc is a media and entertainment company that operates in the diversified content and media industry. The company has two business operations – television and radio. The television division has a collection of paid television services channels. The radio business segment operates several stations that provide both the music, news, and talk radio markets. The company generates most of its revenue from Canada. It also offers children's publishing and animation, which is sold internationally.

Corus Entertainment has announced a partnership with Duncan Studio, a US-based private animation firm, to produce original high-quality animated films for the international market.

Corus Entertainment Stock Performance

Corus share price has surged almost 18.5 per cent in the last three months. The stock has rebounded over 48 per cent since the pandemic-led crash on March 24. However, the company scrips posted a nearly 44.5 per cent decline year-to-date (YTD). Corus’ current market capitalization is C$ 604.6 million.

Corus Entertainment is paying its shareholders a quarterly dividend of C$ 0.06. It has a current dividend yield of 8.316 per cent. The company’s earnings per share (EPS) is negative C$ 3.04. Its price-to-book ratio is 0.686. Corus’ return on equity (ROE) is -50.47 per cent. Its price-to-cashflow ratio is 1.9, as per TMX data.

Corus Entertainment Financial Highlights

Corus Entertainment reported its earnings for the third quarter of 2020 with total revenue of C$ 34.9 million, a nearly 24 per cent down compared to C$ 45.8 million in Q3 of 2019. The company’s consolidated profit fell 35 per cent year-over-year. The company consolidated profit decreased by 35 per cent for the third quarter and 13 per cent YTD.

The entertainment venture posted a net loss of C$ 752.3 million (US$ 3.61 loss per share basic) for the third quarter and C$ 655.6 million (US$ 3.12 loss per share basic) YTD, which comprises non-cash impairment charges associated to broadcast licenses and goodwill of C$ 786.8 million. The company reported a free cash flow of C$ 90.8 million for Q3 FY20 and $208.9 million YTD.

Corus Entertainment Inc. will announce its fourth quarter and year-end financial earnings on Thursday, October 22, 2020.