Netflix Soars to New Heights with Stellar Q4 Earnings
The streaming giant’s stock surged nearly 10% on Wednesday, closing at an all-time high, as Wall Street analysts praised its impressive fourth-quarter earnings results. The company’s shares briefly touched $1,000 a share, with Pivotal Research setting a new price target of $1,250, the highest on the Street.
A Record-Breaking Quarter
Netflix reported a staggering 18.9 million new users in the fourth quarter, marking the largest quarterly subscriber gain in its history. Revenue and earnings also exceeded expectations, with the company projecting 2025 revenue between $43.5 billion and $44.5 billion.
A Successful Year
Including Wednesday’s price action, Netflix stock has surged about 100% year over year, with shares hitting several all-time highs in 2024. The company’s strong performance can be attributed to its successful live sports programming, including two back-to-back NFL games and the highly popular “Jake Paul vs. Mike Tyson” boxing match.
Price Hikes and Advertising Revenue
The company announced a $15 billion stock buyback and boosted its full-year revenue outlook. Additionally, Netflix raised the price of its ad-supported plan to $7.99, with its Standard, ad-free tier increasing to $17.99, and its Premium plan rising to $24.99. Advertising revenue doubled in 2024, with management guiding to another doubling in 2025.
Monetizing the Member Base
Analysts were encouraged by the company’s ability to monetize its member base, with advertising and price increases driving growth. Macquarie analyst Tim Nollen noted that investor focus will shift to Netflix’s ability to monetize its members, and the company’s recent moves have answered this question.
Live Events and Sports Programming
Netflix co-CEO Greg Peters emphasized that the huge jump in subscribers wasn’t driven by one particular event, despite the company’s recent live sports programming push. The company will continue to focus on delivering special event programming, including the recent debut of WWE Raw and potential bids on UFC rights.
Financial Performance
Revenue hit $10.25 billion in Q4, beating estimates, with diluted earnings per share (EPS) also exceeding expectations. Operating margins sat at 22.2% in the fourth quarter and 27% for full-year 2024, with the company expecting Q1 operating margins to expand to 28.2%.
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