Investors are closely monitoring the recent surge in Netflix stock following the company’s impressive third-quarter earnings report. The streaming giant surpassed Wall Street’s expectations for both revenue and subscriber growth, leading many investors to consider potential price increases for the stock.
Netflix reported a significant 15% increase in revenue compared to the same period last year, with third-quarter revenue coming in at $9.83 billion, exceeding the consensus estimate of $9.78 billion. This was partly attributed to price increases on specific subscription plans implemented by the company last year. Additionally, Netflix continued to drive growth through revenue initiatives such as the restriction on password sharing and the introduction of an ad-supported tier.
The company’s projected revenue for the fourth quarter is even more impressive, with Netflix anticipating revenue of $10.13 billion, surpassing the consensus estimate of $10.01 billion. Looking ahead to the full year of 2025, Netflix expects revenue to be between $43 billion and $44 billion, representing an 11% to 13% increase from the anticipated 2024 revenue guidance of $38.9 billion.
Operating margins are also expected to improve, with Netflix projecting full-year operating margins to reach 27%, up from the previous 26%. The company’s diluted earnings per share (EPS) in the third quarter exceeded expectations, with a figure of $5.40, significantly higher than the consensus expectation of $5.16. Netflix anticipates fourth-quarter earnings per share of $4.23, exceeding the consensus estimate of $3.90.
In terms of subscriber growth, Netflix added 5 million new subscribers in the third quarter, surpassing expectations of 4.5 million. This follows the 8.05 million net additions in the second quarter, bringing the total paid subscriber count to 8.8 million in the quarter. Popular programs like “The Perfect Couple” and “Nobody Wants This” helped drive these subscription numbers, with Netflix anticipating even higher paid net additions in the fourth quarter due to a strong content lineup and seasonal trends.
The company’s expansion into live events and athletics has been well-received by investors, as has the growth of the ad-supported tier, which accounted for more than 50% of sign-ups in countries where it was available during the third quarter. Netflix stated in its earnings release that it is committed to expanding its advertising business and enhancing its offerings for advertisers, with ad membership increasing by 35% quarter-on-quarter.
Looking ahead, Netflix cited exciting upcoming releases such as “Squid Game” Season 2, the Jake Paul vs. Mike Tyson fight, and two NFL games on Christmas Day as potential drivers of subscriber growth and revenue. The company is also planning to launch its ad tech platform in Canada in the fourth quarter and more broadly in 2025, further positioning itself for continued success in the streaming market.
Overall, Netflix’s strong third-quarter performance and impressive growth projections have investors considering the potential for further price increases for the stock. With a robust content slate, expanding advertising business, and strong subscriber numbers, Netflix appears well-positioned for continued success in the competitive streaming industry.
