Netflix adds more than 5 million new subscribers, earnings report beats expectations

Posted on by

In a recent interview, Netflix revealed some impressive growth metrics for the third quarter. The streaming giant added over 5 million subscribers, surpassing analysts’ expectations of 4.52 million. This surge is complemented by strong financial performance, with sales growing 15% to $9.83 billion and earnings per share rising to $5.40. Notably, analysts had projected sales of $9.77 billion and earnings of $5.12 per share.

Following the announcement, Netflix’s stock rose about 5% in after-hours trading, reaching $724.89. Since May 2022, when investor panic over slowing growth saw the stock plummet, Netflix’s price has more than quadrupled as the company has gained over 60 million subscribers, largely attributed to efforts against password sharing and the introduction of a lower-priced ad-supported subscription model. By the end of the last quarter, Netflix boasted a subscriber base of 282.7 million.

While this growth is commendable, many analysts express concern that the effects of combating password sharing may be temporary. They caution that Netflix will soon need to find new avenues for growth, as investments in advertising and video games have yet to yield significant financial returns. Some worry that the stock may be overvalued.

Dave Heger, an analyst at Edward Jones, noted that subscriber growth appears to be slowing down. However, he acknowledged Netflix’s continued delivery of better-than-expected growth figures. The company’s leadership reassured investors that they expect to benefit from the crackdown on password sharing in the coming years.

Looking ahead, Netflix forecasts fourth-quarter revenue of $10.13 billion and earnings of $4.23 per share. For 2025, they predict sales growth of 11%-13%, aiming for total revenue between $43 billion and $44 billion, primarily driven by new member acquisitions and price increases. Price hikes are set to occur in Spain and Italy this Friday, with a discontinuation of a low-cost subscription plan in Brazil later this season.

Some analysts anticipated an announcement regarding a price increase in the U.S. during the earnings report, but this did not materialize. Management only indicated they would continue to evaluate the situation.

Netflix acknowledged that their advertising business is progressing slowly but maintain ambitious goals for the coming years. They are working on building their own advertising technology and have struck several deals to bundle their ad-supported services with other streaming platforms. Co-CEO Greg Peters emphasized that advertising sales are expected to double next year.

Additionally, Netflix is venturing into live programming to enhance its appeal to advertisers. In the coming month, they will host a live boxing match, followed by two NFL games during the Christmas season. Starting next year, they plan to offer subscribers three hours of live wrestling each week.