Netflix (NFLX) stock price reached an all-time high on Wednesday, closing up nearly 10% after the company’s impressive fourth-quarter earnings results were met with widespread acclaim from Wall Street analysts. The stock surged to approximately $1,000 per share shortly after the opening bell, prompting analysts to swiftly raise their price targets. Pivotal Research, for example, increased its target from $1,000 to $1,250 per share, setting the highest target on Wall Street. While the stock retreated slightly from its intraday peak, it still closed at just under $954.
Table Content:
Record Subscriber Growth Fuels Netflix’s Success
The streaming giant reported a staggering 18.9 million new subscribers in the fourth quarter, significantly exceeding expectations. Revenue and earnings also surpassed forecasts, making it the largest quarterly subscriber gain in the company’s history. Jefferies analyst James Heaney described the Q4 results as “near flawless.” This remarkable performance has contributed to a year-over-year surge of approximately 100% in Netflix’s stock price, with multiple all-time highs achieved throughout 2024. Many analysts now consider Netflix the victor in the fiercely competitive streaming wars.
Positive Outlook and Strategic Initiatives
Further bolstering investor confidence, Netflix announced a $15 billion stock buyback program and raised its full-year revenue outlook for 2025 to between $43.5 billion and $44.5 billion, up from the previous projection of $43 billion to $44 billion. This positive outlook is attributed to several factors, including successful programming such as two NFL games, the “Jake Paul vs. Mike Tyson” boxing match, and the return of the popular series “Squid Game.”
Capitalizing on this momentum, Netflix also announced price increases across its subscription tiers. The ad-supported plan rose to $7.99 from $6.99, the Standard ad-free tier increased to $17.99 from $15.49, and the Premium plan rose by $2 to $24.99. The cost to add an extra member also increased by $1 to $8.99. These price adjustments reflect the company’s growing market dominance and confidence in its content offerings. Wall Street expectations had been for a significantly lower subscriber addition of 9.18 million, especially after the company’s decision last spring to discontinue reporting this metric.
Advertising Revenue and Live Events Drive Future Growth
Macquarie analyst Tim Nollen highlighted the shift in investor focus from subscriber numbers to monetization strategies, stating, “With no more sub reporting to come, investor focus shifts to Netflix’s ability to monetize its member base; advertising and price increases help answer this.” Netflix reported a doubling of advertising revenue in 2024 and projects another doubling in 2025, though it anticipates advertising becoming a primary revenue driver in 2026.
While the company’s recent foray into live sports programming has generated significant buzz, Netflix co-CEO Greg Peters clarified that the subscriber surge wasn’t solely attributable to any single event. Live events, including the highly successful Jake Paul vs. Mike Tyson boxing match and NFL games, attracted massive global audiences but represented a minority of new customer acquisitions. This balanced growth across various content categories reinforces the strength and diversity of Netflix’s programming portfolio. Looking ahead, Netflix plans to continue expanding its live event offerings with a focus on “can’t-miss, special event programming” rather than large regular season sports packages.
Strong Financial Performance and Competitive Landscape
Netflix’s Q4 revenue reached $10.25 billion, exceeding the Bloomberg consensus estimate of $10.11 billion. Diluted earnings per share (EPS) also surpassed expectations at $4.27, compared to the consensus estimate of $4.18. While the company’s Q1 revenue guidance of $10.42 billion fell slightly short of the consensus estimate of $10.48 billion, its overall financial performance remains robust. Operating margins were strong at 22.2% in Q4 and are projected to expand to 28.2% in Q1.
Despite operating in a highly competitive landscape, Netflix expressed confidence in its ability to navigate the challenges and continue its growth trajectory. The company emphasized its focus on continuous investment and improving product/market fit globally. Netflix’s recent success, combined with its strategic initiatives and strong financial performance, positions it for continued leadership in the streaming industry.
