Netflix stock soars after subscriber growth blows away forecasts, company announces more price hikes

Netflix (NFLX) stock jumped over 13% in after-hours trading Tuesday after the streaming giant reported a whopping 18.9 million users in the fourth quarter while revenue and earnings also handily beat expectations.

The company also announced a $15 billion stock buyback and boosted its full-year revenue outlook. Netflix now projects 2025 revenue between $43.5 billion to $44.5 billion, ahead of the prior $43 billion to $44 billion range.

The strong subscriber gains come as the streamer ended 2024 with two back-to-back NFL games, a successful “Jake Paul vs. Mike Tyson” boxing match, and the return of “Squid Game.” To that end, the company said price hikes will be hitting the service — which analysts had consistently teased heading into the print.

“We are adjusting prices today across most plans in the US, Canada, Portugal and Argentina,” the company said in the release.

The company is raising the price of its ad-supported plan to $7.99 from the prior $6.99. It’s Standard, ad-free tier will now be $17.99, up from $15.49, while its Premium plan will increase by $2 to $24.99. Users who want to add an extra member will now pay $8.99, an increase of $1.

Wall Street had expected the streaming giant to report just 9.18 million subscribers after it secured 13.12 million paying users in Q4 2023. The company announced last spring it would stop reporting the metric at the start of this year.

Revenue hit $10.25 billion in Q4, beating Bloomberg consensus estimates for $10.11 billion and marking an increase of 16% compared to the same period last year. Netflix guided to first quarter revenue of $10.42 billion, a miss compared to consensus estimates of $10.48 billion.

Diluted earnings per share (EPS) also beat estimates in the quarter, with the company reporting EPS of $4.27, above consensus expectations of $4.18 and well ahead of the $2.11 EPS figure it reported in the year-ago period. Netflix guided to fourth quarter EPS of $5.58, below consensus calls for $6.01.

Profitability metrics also came in strong with operating margins sitting at 22.2% in the fourth quarter and 27% for full-year 2024. Netflix expects Q1 operating margins to expand to 28.2%.

Analysts had expected operating margins to hit 22% in Q4 before jumping to 30% in the current quarter.

“Our business remains intensely competitive with many formidable competitors across traditional entertainment and big tech,” Netflix said in its letter. “We’re fortunate that we don’t have distractions like managing declining linear networks and, with our focus and continued investment, we have good and improving product/market fit around the world.”

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Expectations were high heading into the report given the company’s strong Q4 content slate, which was dominated by live sports programming.

Notably, the Jake Paul and Mike Tyson match attracted over 108 million global viewers, becoming the most-streamed sporting event of all time. For context, the 2024 Super Bowl, which was the most-watched American TV broadcast ever, pulled in 124 million US viewers.

Similarly, the NFL games averaged around 30 million viewers. According to Netflix, it was its most-watched Christmas Day ever in the US.

The company will continue to double down on sports amid the recent debut of WWE Raw. Rumors have also swirled the company could bid on UFC rights.

Netflix said in its shareholder letter it’s not focused on rights for “large regular season sports packages; rather, our live strategy is all about delivering can’t-miss, special event programming.”

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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