Netflix Q4 Earnings Soar, Driving Stock to All-Time High
Strong Subscriber Growth and Revenue Beat Estimates
Netflix (NFLX) surged to an all-time high on Wednesday, closing up nearly 10% after impressive fourth-quarter earnings. The company handily exceeded expectations, reporting a whopping 18.9 million new subscribers.
Revenue hit $10.25 billion, a 16% increase year-over-year, beating analysts' consensus estimates. Diluted earnings per share (EPS) also surpassed expectations at $4.27.
Analysts Praise Results, Increase Price Targets
Wall Street analysts praised Netflix's performance, leading to significant increases in price targets. Pivotal Research raised its target from $1,000 to $1,250, the highest on the Street.
"Q4 results were near flawless," said Jefferies analyst James Heaney.
Stock Buyback and Revenue Outlook
Netflix announced a $15 billion stock buyback and boosted its full-year revenue outlook to $43.5-$44.5 billion, exceeding the previous range of $43-$44 billion.
Price Increase and Ad Revenue Doubling
To monetize its growing membership base, Netflix implemented price hikes for its ad-supported, standard, and premium plans. Additionally, advertising revenue doubled in 2024, and management expects it to double again in 2025.
Live Events Drive Engagement
Netflix executives stressed that live events, such as NFL games and the "Jake Paul vs. Mike Tyson" boxing match, did not disproportionately contribute to the subscriber surge.
EPS and Profitability Metrics
EPS for the first quarter is projected to be $5.58, slightly below consensus estimates. However, operating margins for the full year 2024 reached 27%, and Netflix expects them to expand to 28.2% in Q1 2025.
Competition and Investment
Netflix acknowledged the intense competition in the entertainment industry but emphasized its focus on delivering exceptional products and investing in its business.