Netflix shares soar on price hikes and record subscriber gains

By Dawn Chmielewski

(Reuters) - Netflix (NASDAQ:) reaffirmed its dominance of the streaming video marketplace connected Tuesday, arsenic its substance of unrecorded sporting events, fashionable returning bid - and singular moments, specified arsenic a shot halftime show by Beyonce - helped pull a grounds fig of subscribers implicit the vacation quarter.

The institution added 18.9 cardinal subscribers successful its 4th fourth to bring its full planetary subscriber basal to astir 302 cardinal customers - a fig that dwarfs its Hollywood streaming rivals.

Netflix sought to capitalize connected its galloping popularity by raising prices successful the U.S., Canada, Portugal and Argentina arsenic it spends much connected programming. In the U.S., the company's ad-supported work volition outgo $7.99 a month, up from $6.99, portion the premium bundle volition outgo $24.99, up 9% from existing pricing.

Investors reacted enthusiastically to the results, sending Netflix's banal surging astir 13% successful extended trade, lifting its banal marketplace worth by astir $50 billion. Over the past year, Netflix shares person gained much than 77%, outpacing the 's 24% rise. 

"Netflix reaffirms its enactment presumption and is perfectly moving distant successful the streaming market," said Paolo Pescatore of PP Foresight. "It is present flexing its muscles by adjusting prices fixed its acold stronger and diversified programming slate compared to rivals."

The institution said its fourth-quarter programming slate surpassed its ain expectations, with viewers bingeing connected the 2nd play of its dystopian endurance thriller "Squid Game," which the institution said is connected way to go 1 of its most-watched archetypal series.

Netflix's deepening concern successful live-streamed events is drafting tens of millions of viewers. The heavyweight boxing lucifer betwixt Jake Paul and Mike Tyson successful November attracted 65 cardinal streams. The 2 National Football League games connected Christmas Day, 1 featuring Beyonce's halftime performance, brought successful an mean of 30 cardinal planetary viewers, ranking among the most-streamed competitions successful league history.

“To authorities the obvious, it’s contented that drives users to streaming services," said Forrester Research (NASDAQ:) Director Mike Proulx. "With the biggest bump successful subscribers ever, Netflix’s attraction to prime contented is the crushed for an wide beardown twelvemonth and 4th quarter."

Netflix said it has shaken disconnected the impacts of COVID-19 and the 2023 Hollywood writers' and actors' strikes, and is delivering returning seasons of its astir fashionable shows, including the Addams Family bid "Wednesday," and the supernatural "Stranger Things." 

It volition besides broadcast much unrecorded events, including play installments of WWE "Monday Night Raw" wrestling. It secured the rights for the FIFA Women's World Cup successful 2027 and 2031, a woody which it says illustrates its strategy to present special-events programming, alternatively than regular play sports packages.

Such unrecorded events are charismatic to advertisers, due to the fact that they gully audiences that ticker successful existent time.

"We exceeded our ads gross people successful the 4th quarter," said Netflix Co-CEO Greg Peters, adding, "We doubled our ads gross twelvemonth implicit twelvemonth past year. We expect to treble it again this year."

The institution said the ad-supported mentation of its work accounts for 55% of its caller sign-ups successful countries wherever it is available.

Macquarie Equity Research expert Tim Nollen predicted that advertisement gross volition summation to $2 cardinal this year, arsenic much radical motion up for the company's advertising-supported tier and Netflix's advertizing exertion matures. Live events volition proceed to thrust sign-ups, helium wrote successful an capitalist enactment published anterior to Netflix's net report.

This 4th volition besides people the past clip Netflix reports subscriber additions, arsenic the institution emphasizes different show metrics including gross and nett - a alteration analysts property to slowing subscriber growth.

The institution reported per-share net of $4.27, beating Wall Street's forecast of $4.20 per share, according to an mean of projections from 34 analysts. Annual operating income exceeded $10 cardinal for the archetypal clip successful the company's history.

Revenue roseate 16% implicit the aforesaid clip a twelvemonth ago, to $10.2 billion, compared with Wall Street's estimates of $10.1 cardinal for the quarter, according to LSEG. The leap successful subscribers successful the 4th did not make a akin spike successful gross due to the fact that sign-ups occurred passim the quarter, said 1 idiosyncratic acquainted with the matter.

The institution revised its guidance, projecting gross of $43.5 cardinal to $44.5 cardinal successful 2025, an summation of a half-billion dollars implicit the anterior forecast. The updated guidance reflects improved concern fundamentals, the institution said.

Netflix's committee besides approved an incremental $15 cardinal to repurchase shares, which brings the full buyback authorization to $17.1 billion.