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Netflix shares

 

Netflix shares jump over 8% in after-hours trading after company adds 13 million subscribers in Q4 2023 

Netflix shares surged in late trading on Tuesday after the company reported fourth-quarter results that exceeded revenue expectations and showcased significant subscriber growth. 

The streaming giant added 13.1 million net new subscribers in the latest quarter, surpassing its own forecast of 8.7 million net additions and marking its best-ever Q4 for subscriber growth.  

Netflix stock surged up to 8.5% in after-hours trading following the earnings report and currently trades around the $534.80 mark. 

Netflix saw subscriber growth across all regions, with 2.81 million new households in the U.S. and Canada, 5.05 million in Europe, the Middle East, and Africa, 2.35 million in Latin America, and 2.91 million in the Asia Pacific region. For the December quarter, Netflix reported revenue of $8.8 billion, up 12.5% from a year ago and slightly exceeding the forecast of $8.7 billion. Profits were $1.976 billion, or $2.11 a share, just below the forecast, including a $239 million non-cash charge related to foreign exchange fluctuations on the company’s euro-denominated debt. 

Netflix revenue forecast eyes $9.24 billion revenue in Q1 2024 

Looking ahead to the March quarter, the company cited a revenue forecast of $9.24 billion, a 13.2% increase, in line with Wall Street consensus estimates cited by Barron’s reporter Eric J. Savitz. 

The company also expects first-quarter profits of $4.49 a share, above the Wall Street consensus, as measured by FactSet, of $4.10 a share. While Netflix has stopped providing specific subscriber guidance, it anticipates the number to be lower than the fourth quarter but higher than the 1.8 million net additions in the year-ago period. 

For the full year 2024, Netflix projects "healthy double-digit revenue growth" adjusted for currency and has increased its operating margin forecast to 24% — up from the previous range of 22% to 23%. The company highlighted its continued investment in building out its ads business, which now accounts for 40% of new sign-ups in markets with an ad-supported tier. 

Netflix disclosed it had repurchased $2.5 billion of stock in the quarter, with $8.4 billion remaining on its current buyback authorization.  

On the earnings call, the company also mentioned a $5 billion, 10-year deal to become the new home for the weekly wrestling program Raw, starting in January 2025, along with all WWE shows and specials outside the U.S. The deal falls under the company’s previously announced target of $17 billion in annual content spending, Netflix said on Tuesday. 

The financial terms of the Netflix-WWE deal were not detailed, but the streaming company’s Co-CEO Ted Sarandos said the agreement has “economics we are super happy with.” 

Analysts hike Netflix share price targets, raise guidance ahead of earnings call 

Jessica Reif Ehrlich, an analyst at BofA Securities, raised her Netflix share price target from $525 to $585 while retaining her Buy rating ahead of yesterday’s earnings call. 

"Netflix has won the 'streaming wars,' " she said, adding that some media companies have pulled back from the market. 

"Over the last 18 months, changing market dynamics, investor focus on profitability, and the various talent strikes have led several media companies to re-evaluate their streaming aspirations," she said. 

These companies have cut down on their content expenditures and have increased their content licensing to platforms like Netflix and others. 

"These changes have been a tacit acknowledgement that not all media companies will be able to achieve Netflix's global reach and scale in streaming," she added. 

KeyBanc Capital Markets analyst Justin Patterson increased his Netflix price target to $545 from $525 and kept his Overweight rating, noting that the company is showing “healthy subscriber growth.” 

Netflix shares, which closed at $492.19 (up 1.33%) on Tuesday, surged in after-hours trading after the release of the earnings report. Netflix stock, which trades on the Nasdaq stock exchange under the ticker NFLX, has risen by close to 20% over the past three months, and gained 33.8% on a 12-month basis.  

NFLX stock has also beat out several key indices, namely the S&P 500 and Dow Jones Industrial Average. The benchmark S&P500 stock index showed growth of 16.2% and 21.12% in the same periods respectively, while the Dow showcased slightly lower figures of 14.75% and 12.33%. 

When considering shares for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.    

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. 

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