Cash is nice in a crisis, but Netflix is stockpiling content
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This week: Netflix's downturn plan — cash, credit, and content.
We got our first peek at how Big Tech is holding up against the coronavirus fallout on Tuesday, and it confirmed what the parent of any quarantined teen could have told you: People are spending a lot of time on Netflix and
The two internet companies reported booming user growth numbers for the first quarter. Netflix added nearly 16 million new paying subscribers, while Snapchat's audience increased by 20% to 229 million daily usersThe real surprise was how well Snapchat's advertising business performed. A feared ad revenue meltdown, caused by big brands and small businesses frantically slashing their marketing expenses, has not yet happened. That's good news for all the other ad-dependent internet companies out there, like Twitter, Facebook, and Google. And indeed, all of those stocks got a nice sympathy bump after Snap's earnings crossed the wire. But there's reason to be cautious. Snap noted that its 44% revenue growth rate in Q1, decelerated to a 15% clip during the first 19 days of April. And it slowed to 11% in the most recent week. Advertisement
Yes, Snap's revenue is still growing, but the trendline is rapidly losing altitude. Perhaps that's why Snap stressed that in addition to the $2.1 billion in cash on its balance sheet, it has access to a $1 billion credit facility — a reassurance that, by its very necessity, might seem concerning.
Netflix, which has $5 billion in cash on its balance sheet, also felt compelled to mention on its conference call that it has an undrawn $750 million unsecured credit facility.Netflix also touted another notable rainy day fund, of sorts.Advertisement
With film production halted throughout the industry because of the virus, streaming video services like Netflix, Apple, and Disney+ will face challenges satisfying their viewers' appetite for new content.
Not to worry, says Netflix. Thanks to a library of thousands of titles it has amassed, the company has an advantage over streaming video rivals confronting the "shortage of new content."As far as shortages go, this one is a decidedly first-world problem. But it's also a fitting expression of our quarantined times. Netflix has stockpiled something more valuable than cash or credit. It's got content. Advertisement
Even a toothbrush needs a halo effect
An electric toothbrush may seem like a humble building block for an empire. But for Simon Enever, the 32-year-old founder of
As a standard-bearer for the new breed of direct-to-consumer brands, Quip is sure to be closely watched in the months ahead.
Read Melia's full story here:
Former employees of Quip, a $170 million electric toothbrush startup that cut 10% of staffers weeks before the coronavirus hit, say a range of issues could frustrate its ability to ride out the pandemic
Tech workers are sweating...With 22 million Americans filing unemployment claims in the past month, anxiety about layoffs is running high. The anonymous social network Blind surveyed nearly 7,000 tech workers for BI in March and in April asking: "Are you concerned your job security will be negatively affected by the economic trends stemming from the Coronavirus?" Advertisement
Those who answered "yes" are depicted in blue in the chart below. The results show a wide disparity in opinion among workers at tech companies.
At Expedia, a staggering 95% of workers surveyed expressed concern. (The company, which is closely tied to the devastated travel industry, had already laid off 12% of staff in February.) Worries at Lyft shot up over the past month, while Facebook workers appear to be keeping relatively calm.Check out the full survey results, which you can read here, from workers at Apple, Salesforce, and numerous other big tech companies.Advertisement
Sound bite of the week:
"Our biggest problems generally don't have market-based solutions and the true solutions often aren't aligned with profit maximizing activities the way they are currently defined."
Former US presidential candidate
Recommended readings:Some of Google's summer international interns are being told their pay will be slashed by almost half – and they have just 24 hours to accept the new offerAdvertisement
Tech CEOs say they plan to scale back on real estate for offices now that they know everyone can work from home, and it's not good news for WeWork These 15 companies could be acquisition targets for Amazon, Microsoft, and Google as the coronavirus crisis ratchets up the cloud wars and crushes tech valuationsAdvertisement
Racist Zoombombers attacked my friends — here's how I tracked the trolls down
Not necessarily in tech:The price of US crude oil just went negative for the first time. Here's what that really means and why it's not free to fill up your car.Advertisement
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— AlexeiRead the original article on Business Insider
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