Netflix Stock Soars After Impressive Earnings Report

Netflix's stock surged by 11% on Friday, reaching a new record high of over $760, following the release of its third-quarter earnings report. The streaming giant exceeded Wall Street expectations in both revenue and subscriber growth, signaling strong performance amid a competitive market.

Key Takeaways

• Netflix's Q3 revenue hit $9.83 billion, surpassing estimates of $9.78 billion.
• The company added over 5 million new subscribers, exceeding expectations of 4.5 million.
• Netflix's operating margin reached nearly 30%, indicating robust profitability.
• The stock's performance reflects investor confidence ahead of upcoming earnings reports from other tech giants.

Strong Earnings Report

Netflix's third-quarter earnings report showcased impressive growth metrics. The company reported revenue of $9.83 billion, a 15% increase from the previous year, and diluted earnings per share (EPS) of $5.40, beating estimates of $5.16. This performance was driven by several strategic initiatives, including a crackdown on password sharing and the expansion of its ad-supported tier.

Subscriber Growth

The streaming service added 5.07 million subscribers in Q3, significantly higher than the anticipated 4.5 million. This growth follows a strong second quarter, where Netflix added 8.05 million subscribers. The company attributed this success to popular programming, including breakout hits like "The Perfect Couple" and "Nobody Wants This."

Future Projections

Looking ahead, Netflix projects fourth-quarter revenue of $10.13 billion, slightly above the consensus estimate of $10.01 billion. For the full year of 2025, the company anticipates revenue between $43 billion and $44 billion, reflecting an 11% to 13% growth from its expected 2024 revenue.

Market Reaction

The positive earnings report led to a significant uptick in Netflix's stock price, which has risen approximately 45% since the beginning of the year. Analysts have responded favorably, with many raising their price targets for the stock. For instance, TD Cowen increased its target from $820 to $835, citing strong subscriber growth and profitability.

Broader Market Impact

Netflix's strong performance contributed to a positive day for the stock market, with the S&P 500 and Nasdaq Composite also recording gains. The S&P 500 reached a new all-time high, marking its sixth consecutive week of gains. This trend reflects a broader optimism in the tech sector, particularly as major companies prepare to report their earnings in the coming weeks.

Conclusion

Netflix's latest earnings report not only highlights its resilience in a competitive streaming landscape but also sets a positive tone for the upcoming earnings season for other tech giants. With strong subscriber growth and a solid revenue outlook, Netflix continues to be a key player in the entertainment industry, attracting investor confidence and market attention.

Sources

• Stock Market Today: Netflix Stock Jumps on Earnings; Amex Weighs on Dow, WSJ.
• Stock market today: S&P 500 sets record, longest weekly win streak of 2024 as Netflix surges, Yahoo Finance.
• Netflix stock secures fresh record after earnings, subscriber growth top estimates, Yahoo Finance.
• Nasdaq pops, Netflix stock soaring on Q3 earnings results, Yahoo Finance.
• Netflix Stock, Q3 2024 Earnings Report Review: Analysts React, The Hollywood Reporter.