Netflix (NFLX) stock price soared to an unprecedented high on Wednesday, closing with a nearly 10% gain following the release of impressive fourth-quarter earnings results that exceeded Wall Street expectations. The stock briefly touched $1,000 per share shortly after the opening bell, prompting analysts to revise their price targets upwards. Pivotal Research, for instance, raised its target from $1,000 to $1,250, the highest on Wall Street. While shares retreated slightly from their intraday peak, they still closed just under $954, solidifying a remarkable 100% year-over-year surge.
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Record Subscriber Growth and Financial Performance
Netflix reported an astounding 18.9 million new subscribers in the fourth quarter, shattering previous records and significantly outperforming analysts’ projections of 9.18 million. This exceptional growth propelled revenue and earnings to surpass expectations as well. Jefferies analyst James Heaney described the Q4 results as “near flawless.” This remarkable subscriber acquisition follows Netflix’s decision last spring to discontinue reporting subscriber metrics, shifting investor focus towards monetization strategies.
Price Hikes, Stock Buyback, and Revenue Outlook
In addition to the strong earnings report, Netflix announced a substantial $15 billion stock buyback program and raised its full-year revenue guidance for 2025. The company now anticipates revenue between $43.5 billion and $44.5 billion, exceeding the previous projection of $43 billion to $44 billion. Contributing to this optimistic outlook are planned price increases across various subscription tiers. The ad-supported plan will rise to $7.99 from $6.99, the Standard ad-free plan to $17.99 from $15.49, and the Premium plan to $24.99 from $22.99. The cost to add an extra member will also increase by $1 to $8.99. These price adjustments reflect Netflix’s confidence in its content offerings and its ability to maintain subscriber growth despite higher fees. Macquarie analyst Tim Nollen highlighted the importance of advertising and price increases in demonstrating Netflix’s capacity to monetize its substantial user base.
The Impact of Live Events
While Netflix experienced a surge in subscribers, the company attributed this growth to a diverse range of content rather than any single event. Despite recent ventures into live sports programming, including two NFL games and a successful “Jake Paul vs. Mike Tyson” boxing match, co-CEO Greg Peters emphasized that no single title typically drives the majority of acquisitions or engagement. This assertion was well-received by analysts, who saw it as a sign of sustainable growth. Deutsche Bank’s Bryan Kraft, for example, noted that the strength in Q4 subscriber additions was not disproportionately linked to any specific event, suggesting continued momentum.
Looking Ahead: Live Sports Strategy and Competition
Despite downplaying the immediate impact of live events on subscriber growth, Netflix continues to expand its live sports offerings. The Jake Paul vs. Mike Tyson match drew a staggering 108 million global viewers, surpassing even the Super Bowl’s US viewership. Similarly, NFL games on Netflix averaged around 30 million viewers. The company plans to further invest in special event programming, with rumors circulating about potential bids for UFC rights. While acknowledging the intense competition in the entertainment industry, Netflix remains confident in its focused strategy and continued investment in product development. The company’s strong financial performance, record subscriber growth, and ambitious live sports strategy position it for continued success in the dynamic streaming landscape. Q4 revenue reached $10.25 billion, exceeding estimates, and diluted earnings per share (EPS) were $4.27, also above expectations. While Q1 revenue guidance of $10.42 billion fell slightly short of consensus estimates, Netflix projected Q1 operating margins to expand to a robust 28.2%. Operating margins were a strong 22.2% in Q4 and 27% for the full year 2024, exceeding analyst predictions.
