Netflix Soars Nearly 10% on Stellar Q4 Earnings, Leads Streaming Wars
Netflix (NFLX) stock surged to an all-time high on Wednesday, closing the day with a remarkable 9.69% gain. The surge follows the release of the company's impressive fourth-quarter earnings results, which surpassed Wall Street's expectations on multiple fronts.
Record User Growth and Revenue
Netflix reported a staggering 18.9 million net user additions in Q4, far exceeding analysts' consensus estimates of 9.18 million. This represented the company's largest quarterly subscriber gain in history. Revenue also beat projections, reaching $10.25 billion, a 16% increase over the same period last year.
Strong Earnings and Increased Guidance
Diluted earnings per share (EPS) came in at $4.27, surpassing consensus expectations of $4.18 and significantly higher than the $2.11 EPS reported in Q4 2023. Netflix also raised its full-year revenue outlook for 2025 to between $43.5 billion and $44.5 billion, exceeding the previous range of $43 billion to $44 billion.
Live Events Boom and Price Adjustments
Netflix executives attributed the subscriber surge to a combination of factors, including the company's recent push into live sports programming and the return of popular shows like "Squid Game." The company also announced price hikes, with its ad-supported plan increasing from $6.99 to $7.99, its ad-free Standard tier rising from $15.49 to $17.99, and its Premium plan increasing by $2 to $24.99.
Advertising Revenue Doubling
Netflix revealed that its advertising revenue doubled in 2024 and is projected to double again in 2025. However, analysts believe that ad revenue will not become a primary driver for the company until 2026.
Strong Profitability Metrics
Other profitability metrics also showed improvement, with operating margins reaching 27% for full-year 2024. Netflix expects its Q1 operating margins to expand to 28.2%, surpassing analysts' expectations.
Competition and Outlook
Netflix acknowledged the competitive landscape in the entertainment industry but emphasized its commitment to innovation and investing in its products. The company is reportedly considering bidding on UFC rights in the future.
Analyst Commentary
Analysts praised Netflix's performance, with Pivotal Research increasing its price target to a Street-high $1,250. Jefferies analyst James Heaney described the Q4 results as "near flawless."
Netflix stock has surged approximately 100% year-over-year and is expected to continue its upward trajectory as the company consolidates its position as a leader in the streaming industry.