Netflix stock (NFLX) surged to yet one more all-time high, rising as much as 13.6% in early trading on Wednesday, as Wall Street analysts praised the corporate’s fourth quarter earnings results.
Shortly after the opening bell, the stock leaped to just below $1,000 a share as analysts rushed to extend their respective price targets. Pivotal Research upped its goal from $1,000 a share to $1,250 — the very best on the Street.
The streaming giant reported a whopping 18.9 million users within the fourth quarter while revenue and earnings also handily beat expectations. It was the largest quarterly subscriber gain in the corporate’s history.
“Q4 results were near flawless,” Jefferies analyst James Heaney said in a note following the report.
The corporate also announced a $15 billion stock buyback and boosted its full-year revenue outlook in its after-hours report on Tuesday. Netflix now projects 2025 revenue between $43.5 billion and $44.5 billion, ahead of the prior $43 billion to $44 billion range.
The strong subscriber gains come because the streamer ended 2024 with two back-to-back NFL games, a successful “Jake Paul vs. Mike Tyson” boxing match, and the return of “Squid Game.” To that end, the corporate said price hikes might be hitting the service — which analysts had consistently teased heading into the print.
The corporate raised the worth of its ad-supported plan to $7.99 from the prior $6.99. Its Standard, ad-free tier will now be $17.99, up from $15.49, while its Premium plan will increase by $2 to $24.99. Users who wish to add an additional member will now pay $8.99, a rise of $1.
Wall Street had expected the streaming giant to report just 9.18 million subscribers after it secured 13.12 million paying users in Q4 2023. The corporate announced last spring it could stop reporting the metric firstly of this yr.
“With no more sub reporting to come back, investor focus shifts to Netflix’s ability to monetize its member base; promoting and price increases help answer this,” Macquarie analyst Tim Nollen said on Wednesday.
The corporate revealed promoting revenue doubled in 2024 and management guided to it doubling again in 2025. Still, ad revenue isn’t expected to develop into a primary revenue driver until 2026.
On the earnings call, Netflix co-CEO Greg Peters said the massive jump in subscribers wasn’t driven by one particular event, despite its recent live sports programming push.
“We have consistently seen across our history no single title really drives a majority of our acquisition or engagement,” Peters said, noting that live events accounted for a minority of recent customers within the quarter.
Analysts were largely encouraged by this commentary with Deutsche Bank’s Bryan Kraft writing to clients, “Management was very clear that the strength in 4Q net adds was not driven disproportionately by the Tyson vs Paul fight, the NFL, or every other title; due to this fact, we see no reason why the strength won’t proceed.”
Netflix said in its shareholder letter it is not focused on rights for “large regular season sports packages; fairly, our live strategy is all about delivering can’t-miss, special event programming.”
Revenue hit $10.25 billion in Q4, beating Bloomberg consensus estimates for $10.11 billion and marking a rise of 16% in comparison with the identical period last yr. Netflix guided to first quarter revenue of $10.42 billion, a miss in comparison with consensus estimates of $10.48 billion.
Diluted earnings per share (EPS) also beat estimates within the quarter, with the corporate reporting EPS of $4.27, above consensus expectations of $4.18 and well ahead of the $2.11 EPS figure it reported within the year-ago period. Netflix guided to fourth quarter EPS of $5.58, below consensus calls for $6.01.
The Netflix logo is seen on a TV distant controller on this illustration taken Jan. 20, 2022. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo ·REUTERS / Reuters
Other profitability metrics also got here in strong, with operating margins sitting at 22.2% within the fourth quarter and 27% for full-year 2024. Netflix expects Q1 operating margins to expand to twenty-eight.2%.
Analysts had expected operating margins to hit 22% in Q4 before jumping to 30% in the present quarter.
“Our business stays intensely competitive with many formidable competitors across traditional entertainment and massive tech,” Netflix said in its letter. “We’re fortunate that we don’t have distractions like managing declining linear networks and, with our focus and continued investment, we have now good and improving product/market fit all over the world.”
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Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
