Netflix shares surged by 10% on Friday, October 18, 2024, following the release of its impressive third-quarter earnings report. This surge not only boosted Netflix’s stock but also positively impacted major indices like the Nasdaq and S&P 500. The streaming giant reported a revenue of $9.83 billion, marking a 15% increase compared to the same quarter last year and exceeding analyst expectations by $57.6 million.
Main Points
Strong Financial Performance
Netflix’s net income for the quarter climbed to $2.36 billion, translating to $5.40 per share, up from $1.68 billion or $3.73 per share a year earlier. Analysts had anticipated earnings of around $5.16 per share on revenues of approximately $9.78 billion. The company added 5.1 million new subscribers, bringing its total active subscribers to 282.72 million, surpassing Wall Street projections of 281.5 million.
Subscriber Growth
The growth in subscribers is attributed to stricter password-sharing controls, which have encouraged users to sign up independently. Although this growth rate was slower than in previous quarters, it still reflects Netflix’s ability to attract new customers in a competitive streaming landscape. The company plans to stop reporting subscriber numbers starting in 2025, focusing instead on key financial metrics, which analysts believe will streamline performance tracking.
Market Reaction
The positive earnings report led to a significant rise in Netflix’s stock price, which hit record highs during trading hours. By mid-morning, shares were up by more than 10%, contributing to an overall market boost for the Nasdaq and S&P 500 indices. Year-to-date, Netflix’s stock has risen over 41%, showcasing strong investor confidence in its growth strategy.
Future Outlook
Looking ahead, Netflix anticipates a continued upward trajectory with a projected 15% increase in full-year revenues compared to the previous year. The company is also set to expand its content offerings by becoming the official broadcaster for WWE professional wrestling events starting next year, diversifying its programming amidst increasing competition.
Economic Context
Despite facing macroeconomic challenges, including last year’s writer and actor strikes that delayed many film and series releases, Netflix has managed to deliver strong results. The company is expected to benefit from upcoming premieres and a more favorable economic environment as trends like cord-cutting continue to drive viewership towards streaming platforms.
