Netflix Stock Soars to All-Time High After Stellar Q4 Earnings

Key Takeaways

* Netflix (NFLX) surged over 10% in early trading on Wednesday.
* The streaming giant reported a record 18.9 million new subscribers in Q4.
* The company announced a $15 billion stock buyback and raised its full-year revenue outlook.
* Netflix increased its subscription prices for all tiers, including introducing an ad-supported plan.

Earnings Beat Expectations

Wall Street analysts had been expecting Netflix to add 9.18 million subscribers in Q4, but the company exceeded expectations with 18.9 million new users. This was the largest quarterly subscriber gain in the company's history.

Revenue also beat estimates, coming in at $10.25 billion versus the expected $10.11 billion. Diluted earnings per share (EPS) of $4.27 also surpassed the consensus of $4.18.

Advertising Revenue

Netflix revealed that advertising revenue doubled in 2024 and is expected to double again in 2025. However, ad revenue is not expected to become a primary revenue driver until 2026.

Live Events Fuel Growth

Netflix attributed its strong subscriber growth to its recent push into live sports programming. However, the company clarified that no single title was disproportionately responsible for the gains.

Price Hikes

Netflix announced price increases for all tiers of its subscription service. The ad-supported plan will now cost $7.99, while the Standard tier will be $17.99 and the Premium tier will be $24.99.

Analyst Commentary

Analysts praised the company's strong earnings results and price hikes, but noted that consensus estimates for Q1 revenue and EPS were missed. Macquarie analyst Tim Nollen said that investor focus would shift to Netflix's ability to monetize its member base through advertising and price increases.

Future Outlook

Netflix said its business remains intensely competitive, but that it is well-positioned with its focus on product/market fit and ongoing investment. The company will continue to invest in live sports programming and is reportedly considering bidding on UFC rights.