Netflix Surges on Record Subscriber Growth, Revenue Beat
Key Takeaways:
* Netflix (NFLX) stock soared over 14% pre-market after reporting a massive 18.9 million new users in Q4.
* Subscriber gains surpassed Wall Street expectations of 9.18 million.
* Revenue reached $10.25 billion, exceeding estimates and marking a 16% year-over-year increase.
* Earnings per share (EPS) of $4.27 beat expectations of $4.18.
* Company announces a $15 billion stock buyback and raises its full-year revenue outlook.
Subscriber Boom
Netflix's record subscriber growth was not attributed to a single event, despite its recent emphasis on live sports programming. Key events such as NFL games and the "Jake Paul vs. Mike Tyson" boxing match contributed to a minority of new customers.
Price Hikes
To offset costs, Netflix is raising prices across plans in the US, Canada, Portugal, and Argentina. The ad-supported plan increases from $6.99 to $7.99, the standard ad-free tier from $15.49 to $17.99, and the premium plan from $22.99 to $24.99.
Focus on Sports
Netflix will continue to invest in live sports, with WWE Raw as the latest addition. Rumors also suggest a possible bid for UFC rights.
Strong Financials
Netflix's operating margins were robust in Q4 (22.2%) and full-year 2024 (27%), with Q1 margins expected to expand to 28.2%. The company projects Q1 revenue of $10.42 billion, slightly below estimates but still indicative of growth.
Competition
Netflix acknowledges intense competition from both traditional entertainment and technology giants. However, it believes its focus on innovation and global reach will drive continued success.