Shares of Netflix Soar 15% to All-Time High After Record Subscriber Additions
Shares of Netflix soared 15% to hit an all-time high on Wednesday after the streaming giant’s big bet on sports helped add a record 18.9 million subscribers in the holiday quarter. The company’s strong content slate, including the second season of “Squid Game” and the hit streaming movie “Carry-On”, also contributed to the subscriber growth.
Netflix’s global subscriber base now exceeds 300 million, giving it a commanding lead in the streaming wars and more leverage in talks with marketing firms as it looks to grow its ad-supported business. The company’s decision to focus on special events, such as the boxing match between Jake Paul and Mike Tyson, has been a successful strategy, driving the most sign-ups for Netflix for any event since 2019.
The company’s strong report, however, masked one concern: the subscriber surge did not translate into a similar spike in revenue. Sales rose 16% and were only around $100 million above estimates, while the subscriber growth was about twice the expected number. The narrow beat could be attributed to both subscriber growth from lower average revenue per user (ARPU) countries and the significant number of sign-ups for the ad-supported tier.
Despite this, at least 20 analysts raised their price targets on the stock, bringing the median target to $970. The stock’s 12-month forward price-to-earnings ratio stands at 35.43 compared with Walt Disney’s 19.19.
