Netflix Surges After Adding 13.1 Million Subscribers in Q4

LOS ANGELES — Netflix’s stock jumped in extended trading on Tuesday following the company’s report of adding 13.1 million subscribers during the fourth quarter. This growth exceeded Wall Street’s expectations and set a new record for the streaming service, with a total of 260.8 million paid subscribers.

Strong Subscriber Growth

The subscriber growth of 13.1 million easily surpassed the 8.76 million paid membership adds reported in the third quarter. It also exceeded Wall Street’s fourth-quarter expectations of 8 million to 9 million subscribers.

Financial Results

Here are the financial results for the fourth quarter:

• Earnings: $2.11 per share vs. $2.22 per share expected
• Revenue: $8.83 billion vs. $8.72 billion expected
• Total memberships: 260.8 million vs. 256 million expected

Netflix reported a net income of $937.8 million, or $2.11 per share, for the fourth quarter, compared to $55.3 million, or 12 cents per share, in the prior-year period. The company’s revenue for the quarter was $8.83 billion, up from $7.85 billion in the same quarter last year.

Focus on Profitability

As Netflix aims to improve profits, it has increased its 2024 full-year operating margin forecast to 24%, up from a range of 22% to 23%. The company is confident in its performance due to the weakening of the U.S. dollar and a stronger-than-expected fourth quarter.

Netflix also projects earnings per share of $4.49 for the fiscal first quarter of 2024, surpassing Wall Street’s expectation of $4.10.

Content Strategy

While other streaming competitors are cutting down on content spend, Netflix plans to invest in a larger slate. However, the company stated that it will not acquire traditional entertainment companies or linear assets. Instead, it will partner with content makers from the linear space.

Netflix recently announced a deal to stream WWE Raw starting next year, marking its biggest step into live entertainment. The company acknowledges the continued competition in the streaming space and emphasizes the importance of improving its entertainment offering.

Ad-Supported Plan and Revenue Potential

Netflix is transitioning from targeting subscriber growth to focusing on profit. It is using price hikes, password crackdowns, and ad-supported tiers to boost revenue. While ads are not expected to be the primary revenue driver in 2024, Netflix is scaling its ad-based plan and making it more attractive to advertisers.

The company is optimistic about the long-term revenue potential of its ad tier and plans to enhance its sales teams and ad operations to better serve brands. Netflix sees this as a huge opportunity for growth.