Netflix beat Wall Street’s expectations on both earnings and revenue, and added 35 million paid subscribers year-over-year, sending shares of the streaming giant up in after-hours trading.
Netflix logo on a mobile phone in Krakow, Poland on October 17th, 2024. (Photo by Beata Zawrzel/NurPhoto via Getty Images)
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Key Takeaways
- Netflix reported $5.40 earnings per share and a revenue of $9.82 billion in the third quarter of 2024, ending in September 30, beating analyst consensus estimates of $5.12 and $9.77 billion respectively, according to FactSet.
- The company saw a roughly 14% jump in global subscribers to 282 million from 247 million in the third quarter of last year—though subscriber growth has slowed, as the streamer added just over 5 million paid members last quarter, compared to 8 million in the second quarter of 2024 and 8.76 million in the third quarter of 2023.
- It saw a revenue increase of more than 15% from $8.5 billion the year prior.
- Following months of strong subscriber growth (largely stemming from its introduction of a cheaper ad tier in May and the rollout of its password sharing crackdown), shares hit a record high of $736 last Friday, topping its previous high of $733 just a day prior.
- Netflix shares started climbing immediately after the earnings release in after-hours trading.
Key Background
Analysts expected price hikes to sustain a strong revenue growth as the explosion in subscriber growth from its crackdown on password sharing starts to plateau. Netflix’s last big price increase in the U.S. was in October 2023, when it upped the “Basic” plan to $11.99 per month and “Premium” plan to $22.99 per month. Netflix Originals continued to drive engagement in the third quarter with shows like “Emily in Paris” Season 4, “The Perfect Couple” and the first part of “Cobra Kai” Season 6, according to a UBS analyst report.
What To Watch For
The expansion of blockbuster sports content through its deal to stream NFL games on Christmas Day and the planned livestream of the Mike Tyson versus Jake Paul fight is expected to boost engagement and attract ad-tier subscriptions through the fourth-quarter, J.P. Morgan analysts suggest.
How Does Netflix Compare To Other Streaming Services?
Netflix has emerged as the winner of the “streaming wars” following its stark recovery from a tough selloff in 2022 due to its posting of its first quarterly subscriber loss since 2011. In what has been deemed “the Great Netflix Correction,” the company started getting stricter on password sharing and rolling out an ad-supported tier, and expanded its offerings around beloved franchises “Bridgerton,” “Squid Game,” and “Stranger Things.” Its share of viewership in the U.S. has increased from 7.9% to 8.2% from last quarter, according to Nielsen data. Netflix shares continue to outperform those of its peers, who have struggled to turn a profit on their streaming ventures. Disney, one of Neftlix’s main rivals, just posted its first profit in streaming in May following years of losses.
Forbes Valuation
Netflix cofounder and executive chairman Reed Hastings (No. 319 on this year’s Forbes 400 list of richest Americans) is worth $4.3 billion, according to Forbes’ real-time tracker, the majority of which is tied up in his Netflix holdings. Hastings, who stepped down as co-CEO last year, has already reduced his stake in the company by more than 50% since last year. He gifted half his shares earlier this year and has been selling stock options monthly. He now owns less than 1% of Netflix.
