Netflix experienced a surge in its stock value during after-hours trading on Tuesday following the announcement that the streaming giant added 13.1 million subscribers in the fourth quarter. This growth surpassed Wall Street expectations and brought Netflix’s paid subscriber base to a record 260.8 million. The strong performance in the fourth quarter significantly outpaced the 8.76 million new paid memberships reported in the third quarter.
The financial results for the fourth quarter are as follows:
- Earnings: $2.11 per share (compared to the expected $2.22 per share)
- Revenue: $8.83 billion (exceeding the expected $8.72 billion)
- Total memberships: 260.8 million (surpassing the expected 256 million)
Netflix reported a net income of $937.8 million, or $2.11 per share, for the fourth quarter, a substantial increase from the prior-year period’s $55.3 million, or 12 cents per share. The company’s revenue for the quarter rose to $8.83 billion from $7.85 billion in the same period a year ago.
As Netflix continues to focus on profitability, it raised its 2024 full-year operating margin forecast to 24%, up from the previously projected range of 22% to 23%. The company cited a stronger-than-expected fourth-quarter performance and the weakening of the U.S. dollar for this adjustment.
Netflix also anticipates earnings per share of $4.49 for the first quarter of 2024, surpassing Wall Street’s expectation of $4.10. Despite some streaming competitors struggling with profitability and reducing content spending, Netflix remains committed to investing in a larger content slate. The company, however, clarified that it won’t pursue acquisitions of traditional entertainment companies or linear assets.
In a letter to shareholders, Netflix acknowledged the likelihood of further consolidation among companies with large and declining linear networks but asserted its lack of interest in acquiring linear assets. Instead, the company expressed openness to partnerships with content creators who traditionally operated in the linear space.
Notably, Netflix announced a major move into live entertainment by revealing its plan to stream WWE Raw starting next year. While emphasizing the importance of improving its entertainment offering amid competition, Netflix remains focused on its advertising-based plan. The company, though not viewing ads as its primary revenue driver in 2024, aims to scale its ad-based business and make the ad tier more attractive to advertisers. The streaming platform currently has over 23 million global monthly active users in its advertising-based plan.