Netflix stock (NFLX) surged to yet another all-time high, rising as much as 13.6% in early trading on Wednesday, as Wall Street analysts praised the company’s fourth quarter earnings results.
Shortly after the opening bell, the stock leaped to just under $1,000 a share as analysts rushed to increase their respective price targets. Pivotal Research upped its target from $1,000 a share to $1,250 — the highest on the Street.
The streaming giant reported a whopping 18.9 million users in the fourth quarter while revenue and earnings also handily beat expectations. It was the biggest quarterly subscriber gain in the company’s history.
“Q4 results were near flawless,” Jefferies analyst James Heaney said in a note following the report.
Including Wednesday’s price action, Netflix stock has surged about 100% year over year. Shares hit several all-time highs in 2024, as many analysts call Netflix the winner of the hard-fought streaming wars.
The company also announced a $15 billion stock buyback and boosted its full-year revenue outlook in its after-hours report on Tuesday. Netflix now projects 2025 revenue between $43.5 billion and $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.
The company raised the price of its ad-supported plan to $7.99 from the prior $6.99. Its 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.
“With no more sub reporting to come, investor focus shifts to Netflix’s ability to monetize its member base; advertising and price increases help answer this,” Macquarie analyst Tim Nollen said on Wednesday.
The company revealed advertising revenue doubled in 2024 and management guided to it doubling again in 2025. Still, ad revenue is not expected to become a primary revenue driver until 2026.
On the earnings call, Netflix co-CEO Greg Peters said the huge jump in subscribers wasn’t driven by one particular event, despite its recent live sports programming push.
“We’ve consistently seen across our history no single title really drives a majority of our acquisition or engagement,” Peters said, noting that live events accounted for a minority of new customers in the quarter.
Analysts were largely encouraged by this commentary with Deutsche Bank’s Bryan Kraft writing to clients, “Management was very clear that the strength in 4Q net adds was not driven disproportionately by the Tyson vs Paul fight, the NFL, or any other title; therefore, we see no reason why the strength will not continue.”
In November, 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 next.
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.”
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.
The Netflix logo is seen on a TV remote controller in this illustration taken Jan. 20, 2022. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo ·REUTERS / Reuters
Other 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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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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Heather Ochoa is a news writer at the Failsafe Podcast. She has been writing about politics, health, business, parenting and finance for over a decade. She also loves to go hiking in her free time.
