Shares of Netflix (NFLX 9.69%) soared after the video streaming firm posted robust fourth-quarter outcomes and provided an upbeat outlook. The inventory has almost doubled over the previous 12 months, extending a profitable streak that has made Netflix one of many previous decade’s largest winners with a acquire of greater than 1,500%.
Let’s take a better have a look at its This autumn outcomes to find out if the corporate’s newest momentum can proceed.
Sturdy membership development
One space the place Netflix continues to shine is in including new paid members. Final quarter, the corporate noticed its paid memberships climb 16% 12 months over 12 months to 301.63 million, because it added a file 18.91 million members within the quarter. The corporate has now seen double-digit paid membership development the previous six quarters. Nevertheless, This autumn 2024 is the final time the corporate will report membership numbers on a quarterly foundation.
| Metric | Q3 2023 | This autumn 2023 | Q1 2024 | Q2 2024 | Q3 2024 | This autumn 2024 |
|---|---|---|---|---|---|---|
| Membership development (YOY) | 10.8% | 12.8% | 16% | 16.5% | 14.4% | 15.9% |
| Paid members (thousands and thousands) |
301.63 |
Knowledge supply: Netflix earnings experiences.
Income, in the meantime, jumped 16% to $10.25 billion, which was above the $10.11 billion analyst consensus as compiled by LSEG.
U.S. and Canada income climbed 15% with a 12% bounce in paid members and a 4% improve in common income per member (ARM). Asia as soon as once more led the best way as income soared 26%, whereas European income jumped 18% and Latin American income rose 6%. These numbers present that Netflix continues to draw audiences all over the world.
Earnings per share (EPS) greater than doubled to $4.27. That topped the $4.20 analyst consensus.
Netflix’s introduction of ad-supported memberships continues to see early success. For international locations with ad-supported choices, 55% of sign-ups have been on ad-supported tiers. In the meantime, memberships on ad-supported plans climbed 30% sequentially after a 35% quarter-over-quarter bounce in Q3. Netflix famous that viewing hours on ad-supported plans have been much like these on plans with no advertisements, and advert income doubled in 2024. Administration expects to double its advert income once more in 2025.
The robust membership development additionally comes after the corporate enacted worth will increase in a number of areas over the previous few quarters, together with for some international locations in Europe, Asia, and Latin America. Earlier this month, the corporate introduced it will increase costs on most of its U.S. plans, in addition to in Canada, Portugal, and Argentina.
Turning towards steerage, Netflix forecast first-quarter income to develop greater than 11% 12 months over 12 months to $10.42 billion, with EPS rising about 6% to $5.58.
For 2025, Netflix elevated its steerage. It now expects income of $43.5 billion to $44.5 billion, up from a previous view of $43 billion to $44 billion. It additionally upped its working margin outlook to 29% from a earlier forecast of 28%.
Picture supply: Getty Photos.
Is it too late to purchase Netflix inventory?
Netflix’s means to extend costs whereas nonetheless robustly including new memberships places it in a powerful place. The corporate, in the meantime, has a really robust lineup for 2025 with new seasons of widespread exhibits, together with Stranger Issues, Wednesday, Squid Sport, and Alice in Borderland. It additionally started broadcasting the WWE’s widespread Monday Evening Uncooked, drawing in 5 million viewers for its first present.
This content material slate ought to assist proceed to usher in extra memberships. The corporate can be introducing an possibility so as to add further members to the ad-supported subcriptions in 10 of the 12 international locations the place it presents such plans. This, together with Monday Evening Uncooked additionally operating advertisements, ought to proceed to spice up its advert income this 12 months. Netflix will proceed to take time to construct up its world advert community, however promoting ought to ultimately turn out to be a vital a part of its income stream and a giant development driver because it continues to scale.
From a valuation perspective, Netflix trades at a ahead price-to-earnings (P/E) ratio of over 40 occasions analyst estimates for 2025. That is not low-cost but in addition not out of line given the expansion the corporate has been reporting and alternative in entrance of it.
Knowledge by YCharts.
Whereas I would not be backing up the truck for the inventory at these ranges, Netflix stays inventory to personal over the long run.
Geoffrey Seiler has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Netflix. The Motley Idiot has a disclosure coverage.
