During the global pandemic, both Netflix and JPMorgan have shared similar problems and opportunities. Both companies emerged with more customers, cash, and competition.
Netflix added a record number of subscribers last year of 37 million giving the company more than 200 million users around the worldwide. Since sales have gone up to $25 billion, the company stated that it no longer needs to borrow to fund its day-to-day operations.
JPMorgan, America’s largest bank, also gain from the pandemic. The giant lender’s average retail deposits swelled by 25% over the past year and it added 2.4 million new digital customers. JPMorgan’s boss, Jamie Dimon, gave clues as to his response on Wednesday; next week Netflix leaders Reed Hastings and Ted Sarandos will get their turn. For both, the answer may lie in making acquisitions, small and numerous.
However, habits are changing fast. Netflix is preparing investors for the fallout when reports of the second quarter earnings drops on Tuesday: the forecast estimates only 1 million net paid customer addition compared to the 10 million is gained a year earlier. Rivals such as Amazon.com – who bought movie studio MGM for $8.5 billion – are upping their game. Dimon, on the other hand, stated that competition from the old rivals and new firm fintech firms is fierce.
Thus, to keep pulling ahead, JPMorgan needs to spend. However, it is not able to do big deals due to size and hence must rely on using small ones. It has already acquired 30 or more fintech in 2020. With a market capitalisation of nearly $500 billion, Dimon does not have to give much detail on such deals and reassures that even if some fail, investors would not know the difference.
Netflix also ought to have the same advantage. The $8 billion cash of the company has more than doubled in the past 2 years. Hastings and Sarandos only completed two deals last year with Hollywood royalty like Steven Spielberg and Shonda Rhimes. Video game producers, podcast studios and literacy agencies might be smart addition to the company. Even though those deals won’t help immediately they will be important in the next 10 years.
